Dhaka, Bangladesh (BBN) - Yields on long-term treasury bonds rose further on Tuesday as banks remained reluctant to invest surplus funds in government securities ahead of the year-end closing and the upcoming national election.
The cut-off yield—commonly referred to as the interest rate—on the 15-year Bangladesh Government Treasury Bonds (BGTBs) increased to 10.89 per cent from 10.74 per cent, while the yield on the 20-year BGTBs edged up to 10.90 per cent from 10.82 per cent, according to auction results.
Earlier on November 25, the cut-off yield on the 15-year BGTBs had climbed to 10.74 per cent from 10.09 per cent, and the yield on the 20-year BGTBs rose to 10.82 per cent from 10.30 per cent.
On Tuesday, the government raised BDT 20 billion by issuing these long-term BGTBs to partially finance its budget deficit.
“Most banks are reluctant to invest their excess funds in long-term securities as they seek to manage their portfolios more efficiently ahead of the year-end closing on December 31,” a senior official of the Bangladesh Bank (BB) said while explaining the latest market situation.
He also said banks are managing their funds cautiously to mitigate uncertainties surrounding the upcoming national election scheduled for February 12, adding that the current upward trend in BGTB yields may continue in the coming weeks.
At present, five government bonds—with tenures of two, five, 10, 15 and 20 years—are traded in the market.
In addition, four treasury bills (T-bills) are issued through auction to manage government borrowings from the banking system. The T-bills carry maturity periods of 14 days, 91 days, 182 days and 364 days.
BBN/SSR/AD