Dhaka, Bangladesh (BBN) - The yield on five-year treasury bonds inched up on Tuesday, suggesting increased government borrowing from the banking system in the coming months to finance its budget deficit, officials said.
The cut-off yield—commonly referred to as the interest rate—on Bangladesh Government Treasury Bonds (BGTBs) rose to 10.84 per cent from 10.79 per cent earlier, according to auction results.
The government raised BDT 30 billion on the day through the issuance of BGTBs to partially finance the deficit.
“Most banks were reluctant to invest their excess funds in BGTBs after the government announced additional borrowing from the banking system to meet its expenditures,” a senior Bangladesh Bank (BB) official said, explaining the latest market situation.
On Sunday, the central bank issued a special auction notice to borrow BDT 50 billion through 91-day treasury bills (T-bills) for the same reason.
The central banker also anticipated that the current trend in government securities yields may persist in the coming weeks.
At present, five types of government bonds—with maturities of two, five, 10, 15 and 20 years—are traded in the market.
Additionally, four categories of T-bills, with maturities of 14, 91, 182 and 364 days, are auctioned to manage the government’s short-term borrowing needs from the banking system.
BBN/SSR/AD