Dhaka, Bangladesh (BBN) - Yields on two types of long-term treasury bonds rose sharply on Tuesday, as banks showed reluctance to invest surplus funds in government securities ahead of the year-end closing and the upcoming national polls.
The cut-off yield on the 15-year Bangladesh Government Treasury Bonds (BGTBs) increased to 10.74 per cent from 10.09 per cent, while the yield on the 20-year BGTBs climbed to 10.82 per cent from 10.30 per cent, according to the auction results.
On the same day, the government mobilised BDT 20 billion through the issuance of these long-term BGTBs to help finance its budget deficit.
“Most banks are reluctant to invest their excess funds in long-term government securities as part of their efforts to manage portfolios more efficiently ahead of the year-end closing on December 31,” a senior Bangladesh Bank (BB) official said, explaining the current market dynamics.
Banks are also managing their funds cautiously to mitigate any uncertainties surrounding the upcoming national election, the central banker added.
He further noted that the existing upward trend in BGTB yields may persist in the coming weeks.
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