Dhaka, Bangladesh (BBN)- The government is set to issue the newly introduced two-year Bangladesh Government Treasury Bond (BGTB) on May 28 aiming to bring dynamism in the country’s secondary securities market, officials said.
The disclosure came at a meeting of the members of Primary Dealers Bangladesh Limited (PDBL) held in the central bank on Tuesday with Executive Director of the Bangladesh Bank (BB) Sudhir Chandra Das in the chair.
“We’ll start issuance of two-year BGTB worth BDT 3.0 billion from May 28 through auction,” an executive director of the BB told BBN in Dhaka, adding that the next auction of the two-Year BGTB will be held on June 25 with same amount of money.
He also said the amount of the two-year BGTB has been fixed considering the amount of 5-year, 10-year and 20-year BGTBs. “The figure of auction calendar for the government borrowing from the banking sector will remain unchanged.”
A revised auction calendar has already released mentioning the amount of the two-year BGTB in line with the Cash and Debt Management Technical Committee (CDMTC)’s recommendation, the central banker said.
The government is set to borrow BDT 230 billion in the FY 13 against BDT 291.15 billion in the revised target of the previous fiscal, according to the budget document.
Under the arrangement, BDT 184 billion is being borrowed by issuing long-term BGTB, while the remaining BDT 46 billion through Treasury bills (T-bills).
Currently, three T-bills are being transacted through auctions to adjust the government’s borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds, having the tenures of 5-year, 10-year, 15-year and 20-year, are being traded in the market.
On the other hand, the Ministry of Finance (MoF) is also going to start re-issuance of 10-year BGTB worth BDT 5.50 billion from May 14 for the first time in Bangladesh through auction while second auction of same amount of 10-year BGTB re-issuance is scheduled to be held on June 11.
Regarding re-issuance of the existing BGTBs, the MoF earlier said in a notification that the government may from time to time reopen the existing BGTBs for re-issuance of additional amounts. “Such re-issuance shall take place through auctions notified at least one week prior to each auction.”
The meeting also discussed different issues including re-introducing of 28-Day Treasury bill (T-bill) and Intra-day liquidity support, according to the BB officials and PDBL members.
At the same, the PDBL urged the BB to re-introduce 28-day T-bill to facilitate liquidity management properly, a senior PDBL member said.
“We always prefer short-term securities to manage our liquidity profile properly,” the PDBL member told BBN.
BBN/SSR/AD-01May13-2:45 pm (BST)