The interest rate on two more Bangladesh Government Treasury Bonds (BGTBs) fell significantly Tuesday, as commercial banks rushed to offer bids in the auctions, officials said.
A total of 88 bids amounting to Tk 29.06 billion was submitted by the commercial banks on the day against notified amount of only Tk 5.0 billion.
The yield, generally known as interest rate on 15-year BGTBs, came down to 11.59 per cent on the day from 11.87 per cent of the previous auction, held on July 22 last while the yield on 20-year BGTBs fell to 11.89 per cent from 12.10 per cent, according to the auction result.
Thirty eight bids amounting to a total of Tk 13.0493 billion were offered for 15-year BGTBs against pre-targeted amount of Tk 2.50 billion. Of those, four bids amounting to a total of Tk 2.50 billion were accepted.
Besides, 50 bids amounting to a total of Tk 16.0106 billion were offered for 20-year BGTBs against pre-targeted amount of Tk 2.50 billion. Of those, three bids amounting to a total of Tk 2.50 were accepted.
Earlier on August 19 last, the yield on 10-year BGTBs came down to 11.33 per cent from 11.59 per cent of the previous auction, held on July 15 last.
"The yield on the BGTBs decreased because the biding amount was nearly six times higher than the securities value," a senior official of the Bangladesh Bank (BB) told the FE after the auctions.
He also said: "We've nothing to do about fixation of yield of the government approved securities. Actually, it was fixed in line with the market demand."
"Most banks have quoted lower interest rates aggressively to invest their excess funds in the government securities to minimise their cost of funds," a senior treasury official of a leading private commercial bank (PCB) explained.
Currently, the overall excess liquidity with the commercial banks stood at around Tk 1.30 trillion out of which most of the funds have been invested in the government securities.
He also said there is no adequate scope to invest the bank's excess liquidity in the form of loans and advances.
"The declining trend of government securities yield may continue in the coming months due mainly to availability of low cost overseas funds," the private banker noted.
At present, three treasury bills (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.
Furthermore, five government bonds with duration of two, five, 10, 15 and 20 years respectively - are being traded in the market.
© 2024 - All Rights with The Financial Express
