Yield on two-year BGTBs rises significantly

The yield on two-year Bangladesh government treasury bonds (BGTBs) increased significantly on Tuesday as banks expressed their unwillingness to invest funds in the securities.

The cut-off yield, generally known as interest rate, on the BGTBs rose to 11.20 per cent on the day from 10.92 per cent earlier, according to auction results.

The government borrowed Tk 45 billion through issuing the BGTBs on the day to partially meet its budget deficit.

Besides, the government borrowed Tk 5.0 billion on the day through issuing Three-Year Floating Rate Treasury Bonds (FRTBs).

The cut-off yield on the FRTB came down to 12.49 per cent on the day from 12.55 per cent earlier.

The FRTB is a bond whose coupon is determined by adding spread with a benchmark 91 days Bangladesh Compounded Rate (BCR).

The BCR is a daily rate based on the cut-off yield of the 91-day treasury bills (T-bills) auction. This is a reference rate which is primarily used to set the rate of floating rate instruments of the government.

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

Besides, four treasury bills (T-bills) are transacted through an 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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