Dhaka, Bangladesh (BBN) - The yields on two-year Bangladesh Government Treasury Bonds (BGTBs) rose notably on Tuesday, as banks appeared reluctant to invest their surplus liquidity in government securities to manage their portfolios more efficiently.
The cut-off yield—commonly referred to as the interest rate—on the two-year BGTBs increased to 10.10 per cent from 9.44 per cent previously, according to auction results.
Most banks are hesitant to invest their excess liquidity in the bonds, as the volume of such funds has been gradually declining, market insiders said.
Higher government borrowing from the banking system during the second quarter of the current fiscal year (FY 2025-26) has also contributed to the upward pressure on yields for both treasury bills and bonds, they explained.
On the day, the government borrowed BDT40 billion, instead of the BDT 35 billion earlier, through issuing the BGTBs to help finance the budget deficit.
Additionally, BDT 5.0 billion was raised via the issuance of Three-Year Floating Rate Treasury Bonds (FRTBs), whose cut-off yield also edged up to 10.95 per cent from 10.70 per cent earlier.
The FRTB’s coupon rate is determined by adding a spread to the benchmark 91-day Bangladesh Compounded Rate (BCR)—a daily reference rate based on the yield of 91-day Treasury Bills.
Currently, five government bonds—with maturities of 2, 5, 10, 15, and 20 years—and four Treasury Bills of 14-, 91-, 182-, and 364-day tenures are traded through regular auctions.
BBN/SSR/AD