Continuous Rise in Long-Term Treasury Bond Yields

Yields on Bangladesh’s long-term government treasury bonds (BGTBs) continued their upward trajectory on Tuesday, reflecting heightened caution among investors as the fiscal year draws to a close and the nation approaches its forthcoming general election. Commercial banks, typically the primary buyers of government securities, are increasingly favouring short-term instruments or liquid assets over long-term bonds amid prevailing economic uncertainty.

According to the latest auction results, the cut-off yield on 15-year treasury bonds rose from 10.74% to 10.89%, while 20-year bonds edged up from 10.82% to 10.90%. This upward trend began on 25 November, when the 15- and 20-year bond yields were 10.74% and 10.82%, respectively—significant increases compared with previous rates of 10.09% and 10.30%. The government successfully mobilised approximately BDT 20,000 crore in the recent auction, partially offsetting the fiscal revenue shortfall.

A senior official at Bangladesh Bank observed, “Towards the end of the year, banks are reluctant to commit surplus funds to long-term securities. They are prioritising risk-free, liquid portfolios. With the national election scheduled for 12 February, investor risk-aversion has intensified.” He added, “If market participants continue to prioritise short-term liquidity and risk management, this trend of rising long-term treasury bond yields is likely to persist in the coming weeks.”

Currently, five types of government bonds are actively traded in the secondary market: 2-, 5-, 10-, 15-, and 20-year maturities. In addition, short-term treasury bills (T-bills) are regularly issued to manage government cash flow and maintain financial liquidity.

The table below highlights recent changes in long-term bond yields:

Government treasury securities remain a vital instrument for managing the national fiscal deficit and implementing monetary policy. Both long- and short-term bonds form an integral part of debt management strategies, helping to stabilise the financial market while meeting funding requirements efficiently. The recent rise in long-term yields underscores the delicate balance between investor risk appetite and the government’s borrowing needs in a politically sensitive period.