Interest Rate On 20-Year Bonds Rises In Bangladesh

October 27, 2009 10:29 a.m. EST

Dhaka, Bangladesh (AHN) - The interest rate on Bangladesh Government Treasury Bonds (BGTB) increased on Tuesday as commercial banks were not interested to buy longer term bonds with lower interest rates, treasury officials told AHN Media.

The yield, generally known as coupon interest rate, of the 20-year BGTB rose to 9.100 percent on the day from 8.5900 percent of the previous auction held on August 25 this year, according to auction results.

"Most of the commercial banks are not interested to invest their excess liquidity in long-term securities with lower interest rate," a senior treasury official of a private commercial bank told AHN in Dhaka, preferring anonymity.

He also said the banks want to shift their investment portfolios following increasing demand for fresh investment in different sectors including trade and agriculture.

Bidders offered $34.00 million (BDT 2.351 billion) for the bond at an auction, held at the central bank in Dhaka on the day, according to a Bangladesh Bank (BB), the country's central bank, auction result, issued on the day.

"Of those, a bid amounting to total of $2.31 million (BDT 160 million) was accepted and $15.76 (BDT 1.09 billion) was devolved on primary dealers," the auction result said.

The central bank of Bangladesh earlier selected nine primary dealers- eight banks and a non-banking financial institution (NBFI) - to handle government-approved securities in the secondary securities market.

Currently, four government bonds, 5-year, 10-year, 15-year and 20-year, are being traded in the market.