Dhaka, Bangladesh (BBN) - The yield on five-year treasury bonds fell sharply on Tuesday as banks invested surplus funds in risk-free government securities amid weak private sector credit demand ahead of the national polls.
The cut-off yield—commonly referred to as the interest rate—on Bangladesh Government Treasury Bonds (BGTBs) declined to 10.31 per cent from 10.84 per cent earlier, according to auction results.
The government borrowed BDT 30 billion through the issuance of the bonds to partially meet its budget deficit.
“Most banks are parking excess liquidity in government securities as private sector credit demand remains weak ahead of the upcoming national election,” said a senior treasury official at a leading private commercial bank.
Private sector credit growth stood at 6.58 per cent year-on-year in November 2025, up slightly from 6.23 per cent in October, central bank data showed.
Higher remittance inflows, coupled with the central bank’s purchases of US dollars, have boosted market liquidity and contributed to easing yields on government securities, the banker added.
He also expected the downward trend in yields to continue in the coming weeks.
Currently, five government bonds with tenures of two, five, 10, 15 and 20 years are traded in the market. In addition, four treasury bills—14day, 91-day, 182-day and 364-day—are auctioned to manage government borrowing from the banking system.
BBN/SSR/AD