Dhaka, Bangladesh (BBN) – The interest rate on Bangladesh Government Treasury Bonds (BGTB) increased on Tuesday as commercial banks were not interested to buy longer tenor bond with lower interest rate, treasury officials said.

The yield, generally known as coupon interest rate, of the 10-year BGTB rose to 8.75 per cent on the day from 8.49 per cent of the previous auction held on September 1 last, according to auction results.

“Most of the commercial banks are not interested to invest their excess liquidity in long-term securities with lower interest rate,” a senior treasury official of a commercial bank told BBN in Dhaka.

He also said the bankers expect that the demand for fresh investment would go up in the near future and then the interest rate on the bond would also increase.

Bidders offered BDT 6.005 billion for the bond at an auction, held at the central bank on the day, according to a Bangladesh Bank (BB) auction result, issued on the day.

“Of those, three bids amounting to total of BDT 610 million (including two non-competitive bids amounting to BDT 70 million) were accepted and BDT 3.89 billion was devolved on primary dealers,” the auction result said.

Currently, four government bonds – 5-year, 10-year, 15-year and 20-year – are being traded in the market.

BBN/SS/SI/AD-07October09-11;23 am (BST)