Trading in the secondary market of the government's fixed income securities has surged by 90 per cent in the first five months of the current fiscal year (FY'24), compared to the same period of the previous fiscal (FY'23).
According to the data of Bangladesh Bank, the combined value of the transaction of the treasury bills and treasury bonds stood at Tk 819.22 billion in July-November period of the current year as against the value of Tk 431.12 billion in the same period of the last year.
Treasury bills are short-term fixed income securities and treasury bonds are long-term in nature.
The central bank statistics also showed that the secondary trading of these government securities reached Tk 1388.65 billion (or around Tk 1.39 trillion) in the first eleven months of the current calendar year.
The value of the treasury bills and bonds, traded in the secondary market, was Tk 1036.54 billion (or Tk 1.13 trillion) in January-November period of the last year.
The government used to sell these securities to borrow from the financial market with fixed return. Short-term securities are sold to meet the regular spending of the government while long-term securities are used to finance the budget deficit.
Selected commercial banks are now authorised primary dealers (PDs) to purchase the bills and bonds directly through the auction conducted by the central bank.
Other banks and financial institutions are allowed to purchase and sell the bills and bonds among themselves in the secondary market as a secure investment. Individuals can also invest in these fixed-income securities.
The central bank statistics also showed that the secondary trading of these securities recorded a big jump in November this year to Tk 286.13 billion from Tk 191.05 billion in October.
The weighted average yields on 91-Day, 364-Day and 182-Day treasury bills increased in October 2023, compared to the previous month.
Also the weighted average yields on 2-Year, 5-Year, 10-Year, 15-Year and 20-Year treasury bonds increased in October and stood at 9.15, 10.05, 10.39, 10.54 and 10.54 respectively.
Treasury bonds are also tradable in the country's two bourses -- Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE).
There are also non-tradable government fixed-income securities, including Sanchayapatras (savings certificates), Sanchayabonds, and Prize bond.
Resident individuals and institutions, such as banks, non-bank financial institutions (NBFIs), insurance companies, corporations, provident funds, pension funds, etc., can purchase and trade treasury bills and treasury bonds.
Foreign and non-resident individuals and institutions can, however, invest only in the long-term debt securities or treasury bonds.
The latest Bangladesh Bank Quarterly (April-June, 2023) also mentioned that average yields of government securities for all short, medium, and long-term maturities observed an upward shift in
June 2023, compared to March 2023.
The yields on 91-day, 182-day and 364-day treasury bills rose to 6.80, 7.07, and 7.9 in June 2023 from 6.18, 7.01, and 7.40 in March 2023 respectively.
Again, the yields on 2-year and 5-year treasury bonds picked up to 8.09 and 8.71 in June 2023 respectively, from 7.97 and 8.14 in March 2023.
However, in June 2023, 5-year, 15-year, and 20-year treasury bonds were not traded in the market, although their yield rates remained elevated both
in April and May 2023, compared to previous months of FY'23.
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