Written by The Banking Post
The yield on five-year Bangladesh Government Treasury Bonds fell sharply on Tuesday as banks poured surplus liquidity into risk-free government papers amid sluggish private-sector credit demand ahead of the national election.
The cut-off yield at the auction slid to 10.31 per cent, down from 10.84 per cent at the previous sale, official results showed. Despite the lower return, the government raised Tk 30 billion through the bond issuance to partly finance its budget deficit.
Bankers said excess funds are increasingly being parked in government securities as lending appetite in the private sector remains subdued. Private-sector credit growth stood at 6.58 per cent year-on-year in November 2025, only marginally higher than 6.23 per cent in October, according to central bank data.
Market liquidity has been further boosted by strong remittance inflows and the central bank’s ongoing purchases of US dollars from banks, putting downward pressure on yields across government securities. Bankers expect this trend to persist in the near term.
Currently, five government bonds with maturities of two, five, 10, 15 and 20 years are traded in the market. In addition, four treasury bills—14-day, 91-day, 182-day and 364-day—are auctioned regularly to meet the government’s short-term borrowing needs and manage liquidity in the banking system.
