Yield on 10-yr BGTBs rises significantly

The yield on 10-Year Bangladesh Government Treasury Bonds (BGTBs) increased significantly on Tuesday, as banks showed reluctance to invest their excess funds in the long-term securities.

The cut off yield, generally known as interest rate, on the BGTBs rose to 12.48 per cent on the day from 12.05 per cent earlier, according to the auction results.

"Higher borrowing of the government from the country's banking sector to meet budget deficit is pushing up the yields on its securities, including treasury bonds," a senior executive at a leading private commercial bank (PCB) told The Financial Express (FE), explaining the latest market situation.

He also predicted the ongoing upward trend of the treasury bills (T-bills) and bonds to continue in the coming weeks.

However, the government borrowed Tk 35 billion through issuing the BGTBs on the day to partially meet its budget deficit. Earlier on March 18, the cut-off yield on the BGTBs rose to 12.05 per cent from 10.32 per cent earlier.

Currently, five government treasury bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market. 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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