Written by The Banking Post
The yield on five-year government treasury bonds rose sharply on Monday, reflecting weak demand from banks and rising government borrowing pressures.
According to auction results from Bangladesh Bank, the cut-off yield on five-year Bangladesh Government Treasury Bonds (BGTBs) climbed to 10.75 per cent, up from 10.22 per cent earlier.
Market insiders say banks are increasingly reluctant to lock surplus liquidity into long-term government securities, opting instead for more flexible portfolio strategies amid global and geopolitical uncertainties.
“Most banks are not interested in investing excess funds in long-term bonds in order to manage their portfolios efficiently,” said a central bank official.
Higher government borrowing from the banking system has also contributed to the upward pressure on yields, he added.
On the day, the government raised Tk 30 billion through the bond auction, up from Tk 25 billion in the previous issuance, to help finance its budget deficit. Typically, such borrowing tends to accelerate in the final quarter of the fiscal year.
Bangladesh’s government securities market currently includes bonds with maturities of two, five, 10, 15 and 20 years.
In addition, short-term treasury bills—used to manage liquidity—are issued with maturities of 14, 91, 182 and 364 days.
