Dhaka, Bangladesh (BBN) - The yield on 10-year treasury bonds surged on Tuesday, as banks showed reluctance to invest their surplus liquidity in long-term government securities in an effort to manage their portfolios more efficiently.
According to auction results, the cut-off yield—essentially the interest rate—on Bangladesh Government Treasury Bonds (BGTBs) rose to 10.39 per cent, up from 9.99 per cent previously.
Despite the upward pressure on yields, the government managed to borrow BDT 25 billion through the issuance of BGTBs to help finance its budget deficit.
“Most banks are reluctant to park their excess funds in long-term securities for the sake of efficient portfolio management,” a senior treasury official at a leading private commercial bank said, explaining the prevailing market sentiment.
The banker also anticipated that the current rising trend in government securities yields is likely to persist in the coming weeks.
Currently, five types of government bonds—with maturities of 2, 5, 10, 15, and 20 years—are traded in the market.
In addition, four treasury bills (T-bills) with 14-day, 91-day, 182-day, and 364-day maturities are auctioned to help the government manage its short-term borrowing needs.
BBN/SSR/AD