Five-year bond yield rises further

Yields on five-year treasury bonds rose again on Tuesday as banks continued to avoid locking surplus liquidity into longer-term government securities amid cautious portfolio management.
The trend reflects lenders' preference for shorter-tenure investments as uncertainty over private sector credit demand persists.
Bankers said financial institutions are increasingly focusing on maintaining flexibility in their investment portfolios, leading to weaker appetite for long-term Bangladesh Government Treasury Bonds (BGTBs).
They also expect the current trend in government security yields to continue in the coming weeks.
The cut-off yield, generally  known as the interest rate, on the Bangladesh Government Treasury Bonds (BGTBs) rose to 10.78 per cent on the day from 10.75 per cent earlier, according to auction results.
"Most banks are unwilling to invest their excess funds in long-term government securities such as BGTBs to manage their portfolios more efficiently," a senior official of a leading private commercial bank told The Financial Express (FE) while explaining the latest market situation.
The private banker also predicted that the existing trend of yields on the government securities may continue in the coming weeks.
On the day, the government raised Tk 30 billion through the issuance of the BGTBs to partially finance its budget deficit. Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded in 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.
siddique.islam@gmail.com