Yield on 10-year BGTBs falls substantially

The yield on 10-Year Bangladesh Government Treasury Bonds (BGTBs) dropped significantly on Tuesday, as banks expressed eagerness to invest their excess liquidity in the risk-free securities.

The cut-off yield, generally known as interest rate, on the BGTBs fell to 11.88 per cent on the day from 12.48 per cent earlier, according to the auction results.

"Most banks prefer to invest their excess funds in long-term securities rather than short-term ones, anticipating a decline in yields on government securities in the coming months," a senior official of the central bank told The Financial Express (FE).

He also said pressure on the government's bank borrowing may ease in the near future, as inflows of funds from overseas sources are expected to increase by the end of June 2025.

However, the government borrowed Tk 35 billion through issuing the BGTBs on the day to partially meet its budget deficit.

Earlier on May 13, the yield on Five-Year BGTBs dropped significantly on the same ground.

The cut-off yield on the BGTBs fell to 11.99 per cent on the day from 12.39 per cent earlier.

Currently, five government treasury 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 auctions 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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