Yield on 10-year T-bonds rises

The yield on 10-year treasury bonds edged up on Tuesday, as banks showed reluctance to invest surplus funds in long-term government securities, opting instead for short-term instruments to manage their portfolios more efficiently.

According to auction results, the cut-off yield on the 10-Year Bangladesh Government Treasury Bonds (BGTBs) rose to 9.99 per cent from 9.89 per cent previously.

Despite the higher rate, the government managed to borrow Tk 20 billion through the issuance of the long-term bonds to partly finance its budget deficit.

"Most banks prefer to place their excess funds in short-term government securities rather than long-term ones for more efficient portfolio management," a senior Bangladesh Bank (BB) official told The Financial Express, explaining the latest market trend.

Conversely, yields on treasury bills (T-bills) fell further in the auction held on October 19, reflecting continued demand for short-term instruments.

The cut-off yield, effectively the interest rate, on the 91-day T-bills declined to 9.44 per cent from 9.51 per cent, while the 182-day T-bill yield dropped to 9.63 per cent from 9.71 per cent. The 364-day T-bill yield also eased to 9.54 per cent from 9.60 per cent previously.