Dhaka, Bangladesh (BBN) - The yield on long-term treasury bonds fell below 10 per cent for the first time in two years on Tuesday, as banks parked surplus funds in government securities amid weak private credit demand before the national election.
The cut off yield, generally known as interest rate, on the 10-Year Bangladesh Government Treasury Bonds (BGTBs) dropped to 9.89 per cent, which is lower the existing policy rate, on the day from 10.26 per cent earlier, according to auction results.
The yield on 10-Year BGTBs was 9.20 per cent in September 2023.
At present, the policy rate, also known as the repo rate, is 10 per cent.
Talking to the BBN, a senior Bangladesh Bank (BB) official said most banks prefer to invest their excess funds in BGTBs amid subdued private sector credit demand ahead of the general election.
Meanwhile, the growth in private sector credit stood at 6.52 per cent in July 2025 on a year-on-year basis, from 6.49 per cent in June, indicating weakening business confidence and tighter lending conditions.
The central banker also said the government’s reduced borrowing requirement has also contributed to the decline in the yield on the BGTBs.
On the other hand, market interventions by the BB, through purchasing the US dollars from banks, have helped increase liquidity inflows into the market recently, the central banker explained.
The central bank has so far bought $1.75 billion since July 13 last through auctions from banks in the interbank spot market to keep the exchange rate of the US dollar against the local currency stable.
The central banker also predicted that the existing trend of yields on the government securities may continue in the coming weeks.
However, the government borrowed BDT 20 billion on the day through issuing the long-term BGTBs to meet its budget deficit partially.
Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
Besides, four treasury bills (T-bills) are transacted through auction to adjust government borrowings from the banking system.
The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
BBN/SSR/AD