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The yield on Five-Year Bangladesh Government Treasury Bonds (BGTBs) fell significantly on Tuesday as banks were more inclined 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 11.99 per cent on the day from 12.39 per cent earlier, according to auction results.
To partially meet its budget deficit, the government borrowed Tk 50 billion through issuance of BGTBs on the day, exceeding the pre-auction target of Tk 35 billion.
"We've borrowed more funds than the pre-auction target in line with market requirements," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) while explaining the higher-than-expected borrowing.
He also said that higher demand for the BGTBs pushed down the yield on the government-approved securities.
Earlier on May 06, 2025, the yield on Two-Year BGTBs dropped significantly on the same ground.
The cut-off yield on Two-Year BGTBs came down to 11.97 per cent on the day from 12.18 per cent earlier.
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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