Govt buys back Tk 1,716 crore treasury bonds ahead of maturity

The government has, for the first time, bought back two-year treasury bonds worth Tk 1,716 crore before their maturity date, in a move aimed at balancing the maturity structure of public debt and reducing the number of bonds in the market.

The bonds were repurchased through a buyback auction held today.

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According to a Bangladesh Bank press release, the auction was held for two-year treasury bonds issued on November 4, 2024. A total of 56 bids worth Tk 2,016.14 crore were submitted. Of these, bids worth Tk 1,716.14 crore, which were in line with the rates set by the auction committee, were accepted.

A buyback is the process by which the government repurchases previously sold bonds from investors before they mature.

The central bank said this is the first time such a buyback auction has been held in the country's government securities market. It described the initiative as the introduction of a new, market-based approach to government debt management.

Bangladesh Bank said the move will make the maturity structure of government debt more balanced. It will also add flexibility to future financing management and create scope for managing borrowing costs and risks more effectively.

Overall, the central bank said, the process will help bring the government's liability management in line with international standards and make it stronger.

It added that further buyback auctions will be held as needed in the future, taking into account market conditions, liquidity, investor demand and the structure of government borrowing.

A Bangladesh Bank official said such bonds are usually repaid after they mature. This time, however, they were bought back a month before maturity. As a result, the government will not have to pay interest for that month.