Yields on long-term treasury bonds rise further

Yields on long-term treasury bonds increased further on Tuesday, as banks were reluctant to invest surplus funds in the government securities ahead of the year-end closing and upcoming national polls.
The cut-off yield, generally known as the interest rate, on the 15-year Bangladesh Government Treasury Bonds (BGTBs) rose to 10.89 per cent on the day from 10.74 per cent, while the yield on the 20-year BGTBs reached 10.90 per cent from 10.82 per cent, according to the auction results.
Earlier on November 25, the cut-off yield on the 15-year BGTBs rose to 10.74 per cent from 10.09 per cent, while the yield on the 20-year BGTBs reached 10.82 per cent from 10.30 per cent.
On the same day, the government raised Tk 20 billion through issuing these long-term BGTBs to partially finance its budget deficit.
"Most banks are reluctant to invest their excess funds in the long-term securities as they want to manage their portfolios more efficiently ahead of the year-end closing on December 31," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE) while explaining the latest market situation.
He also said banks were managing their funds cautiously to mitigate uncertainties surrounding the upcoming national election scheduled for February 12.
The central banker also predicted the existing trend of yields on the BGTBs might continue in the coming weeks.
Currently, five government bonds, with tenures of two, five, 10, 15 and 20 years, are traded on the market.
Besides, 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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