The yield on 10-year Bangladesh Government Treasury Bonds (BGTBs) surged past 12% on Tuesday, as banks hesitated to invest in long-term securities ahead of the Eid-ul-Fitr festival. According to auction results, the cut-off yield—essentially the interest rate—on the bonds rose to 12.05% from 10.32%, reflecting lower demand for long-term treasury instruments.
A senior official of Bangladesh Bank told that banks are currently prioritizing liquidity management over long-term investments due to upcoming Eid-related expenses. The governments increased borrowing requirements, driven by salary and Eid bonus disbursements for public sector employees on March 23, have also contributed to the trend.
The finance ministry has confirmed that all government, semi-government, and autonomous institution employees, as well as armed forces personnel, will receive their March salaries and Eid bonuses on March 23. To address part of its budget deficit, the government borrowed Tk 40 billion by issuing BGTBs on the day.
A leading private commercial bank’s head of treasury noted that most banks are cautious about investing surplus funds in long-term securities, given concerns about future liquidity conditions. He emphasized that the phase-out of the 28-day repo facility from April 3 would further tighten liquidity. Currently, five government bonds—with tenures of two, five, 10, 15, and 20 years—are actively traded, alongside four treasury bills (T-bills) auctioned to manage government borrowing from the banking sector.
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