Bangladesh Bank (BB) will buy back two-year Treasury bonds through an auction on Thursday, reviving a debt-management tool not used since 2009 as the government looks to reduce exposure to high-cost borrowing.
The bonds were issued on 6 November 2024 and mature on 6 November this year. They carry a 12.30 per cent coupon, with Tk6,666.58 crore still outstanding.
The central bank’s circular does not specify how much of the bonds the government plans to buy back.
The auction follows a 1 October instruction from the Finance Division’s public debt and financial assets management wing and will be conducted through a multiple-price reverse auction.
Under the process, bondholders will quote the prices at which they are willing to sell their holdings back to the government. Settlement is scheduled for 12 October.
Primary dealer banks can participate directly, while other banks and finance companies must submit bids through their linked primary dealers.
Banks and finance companies maintaining current accounts with Bangladesh Bank may submit competitive bids for their own holdings and competitive or non-competitive bids for clients.
Each bidder must quote a price for every Tk100 of face value and state the amount of bonds it wants to sell. Bangladesh Bank will receive bids through its electronic FMI system between 10:00am and 12:00pm on Thursday.
Sealed bids under the earlier manual system may also be accepted in special circumstances with prior approval from the relevant department.
Bangladesh Bank was reported in December 2009 to be preparing to buy back government securities to manage surplus government funds, which then stood at about Tk10,000 crore.
The latest move comes as borrowing costs have eased sharply in the government bond market.
The cut-off yield on two-year Treasury bonds fell to 8.25 per cent this week from more than 12.29 per cent in June 2025.
That decline leaves the 12.30 per cent coupon on the outstanding bonds well above current market yields, giving the government an incentive to retire part of the higher-cost debt before maturity.
