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The yield on the five-year Bangladesh Government Treasury Bonds (BGTBs) fell further on Tuesday as banks expressed willingness to invest their excess liquidity in the risk-free securities.
The cut-off yield, generally known as interest rate, on the BGTBs came down to 10.27 per cent on the day from 11.05 per cent earlier, according to auction results.
Earlier on July 15, the yield on five-year BGTBs fell to 11.05 per cent from 12.40 per cent on the same ground.
The government borrowed Tk 20 billion on Tuesday by issuing the BGTBs to meet its budget deficit partially.
"Most banks prefer to invest their excess funds in BGTBs due to lower credit demand from the private sector ahead of the general election," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE).
He also predicted that the existing trend of yields on the government securities may continue in the coming weeks.
Currently, five government bonds, with tenures of two, five, 10, 15, and 20 years, are traded on the market.
Besides, 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.
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