Foreigners start investing in bond market

Foreigners have started investing in the country's treasury bond market after withdrawal of the one-year lock-in period for them on the government approved securities, officials said.
Foreigners, particularly institutions, have invested around Tk 9.0 billion in Bangladesh Government Treasury Bonds (BGTBs) since April last year through Standard Chartered Bank (SCB), Bangladesh.
"The foreigners have invested their funds in both primary and secondary bond markets," a senior official at the Bangladesh Bank (BB) told the FE Monday.
He also said the Citibank N.A and the Hongkong and Shanghai Banking Corporation (HSBC) Limited have already started preparations to attract their foreign clients to invest in the Bangladesh bond market.
"We expect that such investments will pick up in the near future because of the competitive yield on the government securities," the central banker explained.
He said the yield on government securities has been fixed on the basis of market demand. "We've nothing to do about fixation of yield on the treasury bills (T-bills) and bonds," he added.
Currently, three T-bills are being transacted through auctions to adjust the government's borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, five government bonds with duration of two, five, ten, fifteen and twenty years are being traded in the market.
Earlier on April 11 last, the government withdrew the lock-in provision on all bonds for both non-resident Bangladeshis (NRBs) and foreign nationals aiming to bring dynamism to the secondary securities market.
Currently, the BGTBs purchased by a non-resident may freely be resold to a resident in Bangladesh or to another non-resident.
Earlier, the BGTBs purchased by a non-resident could not be resold to a resident in Bangladesh within one year of purchase.