Yields on long-term bonds fall significantly

The yields on two types of long-term treasury bonds fell significantly on Tuesday as banks expressed willingness to invest their liquidity in the government-approved risk-free securities.

The cut-off yield, generally known as interest rate, on the 15-Year Bangladesh Government Treasury Bonds (BGTBs) came down to 12.50 per cent on the day from 2.65 per cent earlier while the yield on the 20-Year BGTBs fell to 12.65 per cent from 12.75 per cent, according to the auction results.

"Lower credit requirement of the interim government is pushing down the yields on both treasury bills (T-bills) and BGTBs," a senior official of the Bangladesh Bank (BB) told the FE while explaining the downward trend of yields on the government securities (G-Sec).

He also said the existing falling trend of yields on the G-Sec may continue in the coming months if the government revises downward its bank borrowing target for the current fiscal year (FY), 2024-25.

On Monday, Bangladesh Bank Governor Ahsan H Mansur told reporters that the government's bank borrowing target would be reduced to Tk 800-850 billion from the previous estimation of Tk 1375 billion in order to reduce the government's loans from the banking sector.

The government net bank borrowing is set to be Tk 1375.00 billion for FY'25 from Tk 1323.95 billion in the previous year, according to the budget documents.

On the other hand, the government borrowed around Tk 38.52 billion instead of the pre-auction targeted Tk 20 billion on the day through issuing the two-type of long-term treasury bonds to partly meet its budget deficit.

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