Dhaka, Bangladesh (BBN)- The interest rate on Bangladesh Government Treasury Bonds (BGTB) dropped further on Tuesday, as commercial banks rushed to offer bids in the auction, treasury officials said.
The yield, generally known as coupon interest rate, on 5-year BGTB fell to 7.4900 percent on the day from 8.2000 percent of the previous auction, held on July 21 this year.
Besides, the yield on 5-year BGTB was 9.2300 percent earlier auction, held on June 21, 2009, according to the Bangladesh Bank (BB), the country’s central bank, statistics.
Auction of the 5-year BGTB was held on Tuesday of which 25 bids amounting to total of BDT 18.87 billion were offered. Of those, 9 bids amounting to total BDT 4.50 billion were accepted, the BB said in a press statement.
“Most of the commercial banks have quoted lower interest rates to invest their excess liquidity in the risk-free government-approved securities to minimize cost of funds,” a senior treasury official of a commercial bank said.
The overall excess liquidity with the commercial banks stood at BDT 347 billion in June 30 this year, registering a 165 per cent growth over that of the same period of the previous calendar year.
The treasury official also said the demand for such securities has sharply risen mainly due to lower interest rates on call money in the inter-bank market.
The call rate ranged between 0.10 percent and 3.00 percent on the day unchanged from the previous level. But most of the deals were made at rates between 0.10 per cent and 0.15 per cent on the day, market operators said.
Currently, four government bonds – 5-year, 10-year, 15-year and 20-year -are being traded in the markets.
BBN/SS/SI/AD-19August09-9:15 am (BST)