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The yields on two types of Bangladesh Government Treasury Bonds (BGTBs) increased significantly on Tuesday as banks expressed unwillingness to invest their excess liquidity in the risk-free securities.
The cut-off yield, generally known as interest rate, on the Five-Year BGTBs rose to 12.40 per cent on the day from 11.99 per cent earlier while the yield on the 15-Year BGTBs reached at 12.59 per cent from 12.20 per cent, according to the auction results.
"Most banks have shown reluctance to invest their excess funds in the long-term securities ahead of the upcoming June closing," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) while explaining the latest market situation.
Higher demand for funds by the government has also pushed up the yields on the BGTBs, the central banker explained.
However, the government borrowed around Tk 54.49 billion instead of pre-auction targeted Tk 50 billion on the day through issuing two-type of the BGTBs to meet its budget deficit partly.
Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
On the other hand, four 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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