Dhaka, Bangladesh (BBN)- The interest rate on Bangladesh Government Treasury Bonds (BGTB) declined on Tuesday following announcement of interest rates on repurchase agreement (repo) and reverse repo by the central bank.

“Most of the commercial banks are now holding excess liquidity but the investment is not taking place at optimum level,” a senior treasury official of a commercial bank said while explaining the lower interest rate on the bond.

The yield, generally known as coupon interest rate, of the 15-year BGTB fell to 8.69 percent on the day from 8.80 percent of the previous auction, held on September 8 this year, according to auction results.

On Monday, the Bangladesh Bank (BB), the country’s central bank, announced revised downward interest rates on repo and reverse repo at 4.5 per cent and 2.50 per cent respectively which come into effect from Tuesday.

Nine bidders offered BDT 2.905 billion for the bond at an auction, held at the central bank in the capital, Dhaka on the day, according to a central bank auction result, issued on the day.

“Of those, one bid amounting to total of BDT 1.50 billion was accepted,” 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-14October09-2:11 am (BST)