Dhaka, Bangladesh (BBN) - The yield on 15-Year Bangladesh Government Treasury Bonds (BGTBs) increased further on Tuesday while that on 20-Year BGTBs fell slightly.
The cut off yield, generally known as interest rate, on the 15-Year BGTBs rose to 12.40 per cent on the day from 12.28 per cent earlier.
The yield on the 20-Year BGTBs fell to 12.46 per cent from 12.54 per cent, according to the auction results.
The government borrowed BDT 20 billion through issuing the long-term BGTBs on Tuesday to partially meet its budget deficit.
The yield on 20-year BGTBs declined as the auction committee showed a preference for non-competitive bidders—such as individuals, recognized funds, and corporate entities—over competitive ones, according to market operators.
They also alleged that the auction committee accepted the amount of non-competitive bidders at over 70 per cent and around 50 per cent for 15-Year BGTBs and 20-Year BGTBs respectively instead of 30 per cent of notified amount as per the central bank circular issued in 2016. The circular is still in force.
The committee may make decisions on accepting bids from both competitive and non-competitive bidders in line with the government’s preferences, they said, adding that such decisions should be communicated to banks, particularly the primary dealers.
A member of the auction committee, however, rejected the allegation, saying that the committee is now empowered with accepting any amounts from non-competitive bidders.
He also said the committee wants encourage individuals, corporate entities and different welfare funds to invest more in the government securities.
Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
On the other hand, four treasury bills (T-bills) are transacted through auction to adjust government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
BBN/SSR/AD