Dhaka, Bangladesh (BBN) - The yield on two-year treasury bonds rose sharply on Tuesday as banks showed reluctance to park surplus liquidity in longer-term government securities, opting instead for shorter-tenure instruments to better manage their portfolios.
The cut-off yield on Bangladesh Government Treasury Bonds (BGTBs) climbed to 10.73% from 10.23% in the latest auction, reflecting weakening demand. Similarly, the yield on three-year floating rate treasury bonds (FRTBs) increased to 10.82% from 10.60%.
Market participants said banks are increasingly favouring short-term government securities amid prevailing uncertainties.
A senior treasury official at a leading private commercial bank noted that this trend could persist in the coming weeks.
The government raised BDT 40 billion through BGTBs and an additional BDT 5.0 billion via FRTBs to partly finance its budget deficit.
The FRTB coupon is linked to the benchmark 91-day Bangladesh Compounded Rate (BCR), a reference rate derived from the cut-off yield of 91-day treasury bill auctions.
Currently, five government bonds—ranging from two to 20 years—are traded in the market, alongside four treasury bills with maturities from 14 days to 364 days, used to manage short-term government borrowing.
BBN/SSR/AD