Yields on long-term treasury bonds fall below 11pc

The yields on two types of long-term treasury bonds dropped below 11 per cent on Tuesday as banks opted to invest their excess liquidity in the risk-free instruments.

The cut-off yield, generally known as interest rate, on the 15-Year Bangladesh Government Treasury Bonds (BGTBs) came down to 10.48 per cent on the day from 12.59 per cent earlier while the yield on the 20-Year BGTBs fell to 10.55 per cent from 12.49 per cent, according to the auction results.

The sharp decline in yields on government securities -- particularly long-term BGTBs -- were driven by strong participation in the auction by a section of liquidity-rich commercial banks, according to market operators.

The ongoing lower private sector credit growth has prompted banks to channel their excess funds into the government-approved securities, they explained.

The growth in private sector credit dropped to 6.40 per cent in June 2025 on a year-on-year basis, down from 7.17 per cent in a month ago, indicating weakening business confidence and tighter lending conditions.

"Higher participation of individuals as well as corporate entities in the auctions have also pushed down the yields on the long-term bonds," a senior treasury official at a leading private commercial bank (PCB) told The Financial Express (FE) while explaining the latest market situation.

He also said that the government's lower fund requirements during the first quarter (Q1) of each fiscal year have also contributed to the decline in yields on the securities.

However, the government borrowed Tk 20 billion on the day through issuing two-type of BGTBs to meet its budget deficit partially.

Talking to the FE, a senior official of the Bangladesh Bank (BB) said the yields on long-term bonds had risen to higher levels due to lower revenue collection and the June closing pressure.

"It's a market correction that will help restore stability in the near future," the central banker noted.

Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.

Earlier on July 22, the yield on 10-Year BGTBs came down to 10.48 per cent from 12.35 per cent on the same ground.

On the other hand, 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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