Dhaka, Bangladesh (BBN) – The interest rate on Bangladesh Government Treasury Bonds (BGTB) increased slightly on Tuesday, as commercial banks are not interested in buying the bonds with a lower interest rate.
The yield, generally known as coupon interest rate, on 15-year BGTB rose to 8.9200 per cent on the day from 8.8600 per cent of the previous auction, held on August 10 this year.
“The yield of the BGTB has been fixed in line with the market demand,” a senior official of the Bangladesh Bank (BB) said without elaborating.
Bidders offered BDT 1.424 billion for the bonds at an auction, held at the central bank on the day, the BB said in its auction result.
Of those, five bids amounting to BDT 574 million were accepted and BDT 826 million was devolved on primary dealers (PDs), according to the auction result.
The central bank earlier selected 15 PDs – 12 banks and three non-banking financial institutions – to handle government securities in the secondary market.
“Most of the banks expect that the overall interest rate may go up in the near future in line with the central bank’s latest indication and then the interest rate on the long-term security will increase,” a senior treasury official of a commercial bank said.
The BB has increased its policy interest rate by 1.0 percentage point aiming to curb inflationary pressures on economy.
The interest rate on repurchase agreement (repo) auction was re-fixed at 5.50 percent on August 19 this year from 4.50 percent, while reverse repo auction was increased to 3.50 per cent from 2.50 per cent.
Currently, four government bonds – 5-year, 10-year, 15-year and 20-year are being traded on the market.
BBN/SI/AD-15Sept10-10:37 am (BST)
