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The yield on Five-Year Bangladesh Government Treasury Bonds (BGTBs) marked a sharp rise on Tuesday as banks showed reluctance to invest in the securities.
The cut-off yield, generally known as the interest rate, on the BGTBs rose to 12.39 per cent on the day from 11.48 per cent earlier, according to auction results.
The government borrowed Tk 35 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 reissuing Three-Year Floating Rate Treasury Bonds (FRTBs).
The cut-off yield on the FRTB rose to 13.15 per cent on the day from 12.49 per cent earlier.
“The earlier auction of the FRTBs held on Tuesday last was cancelled due to a technical glitch,” a senior official of the Bangladesh Bank (BB) told the FE.
The FRTB is a bond whose coupon is determined by adding the spread with benchmark 91 days Bangladesh Compounded Rate (BCR).
The BCR is a daily rate based on the cut-off yield of 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 auction to adjust government borrowings from the banking system.
The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.