Dhaka, Bangladesh (BBN) -The yield on five-year treasury bonds increased notably on Monday as banks held back from investing surplus funds in government securities, reflecting a cautious portfolio strategy amid geopolitical uncertainties.
The cut-off yield—commonly known as the interest rate—on Bangladesh Government Treasury Bonds (BGTBs) rose to 10.75 per cent from 10.22 per cent earlier, according to auction results.
“Most banks are not interested in investing their excess funds in long-term government securities like BGTBs in order to manage their portfolios efficiently,” a senior official of the Bangladesh Bank (BB) said, explaining the latest market situation.
Higher government borrowing from banks also contributed to the rise in yields, the central banker added.
On the day, the government raised BDT 30 billion through BGTBs to partially finance its budget deficit, up from BDT 25 billion in the previous auction. Government borrowing from the banking system typically increases in the final quarter of the fiscal year.
Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years, 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