Long-Term Treasury Bond Yields Climb Further

Yields on long-term Bangladesh Government Treasury Bonds (BGTBs) continued their upward trajectory on Tuesday, reflecting cautious investor sentiment as banks hesitated to deploy surplus funds in government securities ahead of the year-end financial closing and the forthcoming national elections.

According to the latest auction results, the cut-off yield — commonly regarded as the effective interest rate — on the 15-year BGTBs rose to 10.89 per cent from 10.74 per cent. Meanwhile, the 20-year BGTBs saw their yield climb to 10.90 per cent, up from 10.82 per cent.

This follows a notable increase on November 25, when the 15-year BGTB yield jumped from 10.09 per cent to 10.74 per cent, while the 20-year BGTB yield rose from 10.30 per cent to 10.82 per cent. On that occasion, the government successfully raised Tk 20 billion by issuing these long-term securities, partially addressing its budget deficit.

A senior official at Bangladesh Bank (BB) explained the cautious approach of commercial banks, saying, “Most banks are reluctant to invest excess funds in long-term securities as they aim to manage their portfolios efficiently ahead of the year-end closing on 31 December.” He added that uncertainties surrounding the upcoming national election, scheduled for 12 February, are prompting banks to adopt a more conservative strategy in fund management.

The central banker also indicated that the current trend of rising BGTB yields could persist in the coming weeks, particularly if market participants continue to prioritise short-term liquidity and risk management over long-term investments.

Currently, the government has five bonds actively traded in the market, with maturities of 2, 5, 10, 15, and 20 years. In addition, four types of treasury bills (T-bills) with shorter maturities are issued through auctions to regulate government borrowing from the banking system.

The following table summarises the recent cut-off yields on the long-term BGTBs:

Bangladesh’s treasury securities continue to serve as a key instrument for managing fiscal deficits and guiding monetary policy, with both short-term and long-term instruments forming a vital part of the government’s borrowing strategy.