Dhaka, Bangladesh (BBN) - The yield on 10-year treasury bonds rose sharply on Tuesday as banks showed reluctance to invest surplus funds in long-term securities, opting instead for shorter-tenure instruments to manage their portfolios more efficiently.
The cut-off yield, commonly known as the interest rate, on Bangladesh Government Treasury Bonds (BGTBs) climbed to 10.98 per cent from 10.26 per cent earlier, according to auction results.
“Most banks now prefer shorter-term government securities over long-term bonds,” said a senior treasury official at a leading private commercial bank, explaining the current market trend.
Higher government borrowing from banks in the final quarter of the current fiscal year (FY 2025–26) has also contributed to the rise in yields, the official added.
On the day, the government borrowed BDT 30 billion through BGTBs, exceeding the earlier target of BDT 20 billion, to partly finance its budget deficit, according to the private banker.
The banker also noted that the upward trend in yields on government securities is likely to continue in the coming weeks.
Currently, five types of government bonds—ranging from two to 20 years in tenure—are traded in the market. In addition, four treasury bills (T-bills) with maturities of 14, 91, 182, and 364 days are auctioned regularly to manage the government’s short-term borrowing needs.
BBN/SSR/AD