Yields on long-term Bangladesh Government Treasury Bonds (BGTBs) climbed further on Tuesday, reflecting cautious investor sentiment amid year-end financial closures and the looming uncertainty of the upcoming national elections. Commercial banks, traditionally major buyers of government securities, are increasingly hesitant to deploy surplus funds into long-term instruments, opting instead for more liquid or short-term investments.
According to the results of the latest treasury bond auction, the cut-off rate—which effectively represents the yield—on the 15-year BGTB rose from 10.74% to 10.89%. Similarly, the 20-year BGTB yield increased from 10.82% to 10.90%. These movements indicate an ongoing upward trend in long-term borrowing costs, which had first been observed on 25 November, when the 15-year and 20-year bond yields surged to 10.74% and 10.82% respectively from their previous levels of 10.09% and 10.30%. The November auction enabled the government to mobilise approximately BDT 20,000 crore, partially bridging the fiscal deficit.
A senior official at Bangladesh Bank commented, “As the fiscal year draws to a close, banks are cautious about allocating additional funds to long-term securities, seeking to manage their portfolios conservatively. The uncertainty surrounding the national elections, scheduled for 12 February, is further reinforcing a risk-averse approach.” The official further noted that if market participants continue to prioritise short-term liquidity and risk management, this upward trajectory in BGTB yields is likely to persist over the coming weeks.
Currently, five government bond tenures are actively traded in the secondary market: 2, 5, 10, 15, and 20 years. Additionally, short-term Treasury Bills (T-bills) are regularly issued to manage the government’s borrowing needs and maintain liquidity in the financial system.
The following table summarises the recent changes in long-term BGTB yields:
| Tenure | Previous Rate (%) | Latest Rate (%) | Change (bps) |
|---|---|---|---|
| 15-year BGTB | 10.74 | 10.89 | +15 |
| 20-year BGTB | 10.82 | 10.90 | +8 |
Treasury securities remain a critical instrument for Bangladesh in managing fiscal deficits and guiding monetary policy. Both long-term and short-term instruments form an integral part of the government’s debt management strategy, helping to balance market stability with funding requirements.