Treasury bond trading resumes after 16 years at DSE

The trading of government Treasury bonds has resumed after 16 years on the secondary market of the Dhaka Stock Exchange (DSE).

On Thursday, the units of the newly-listed Tk4,500 crore Treasury bond, issued by the Bangladesh Bank with a 10-year tenure, were traded for Tk1.10 lakh.

On that day, 1,000 bond units were sold at Tk110.50 each, which was 10.50% higher than its issue price.

The VIPB Accelerated Income Unit Fund managed by VIPB Asset Management Company sold the bond units to the Alliance Capital Asset Management through City Brokerage Limited and MTB Securities.

The trading of government Treasury bonds made its debut in 2005 when they were listed on the capital market for secondary trading. After that, no one tried to sell or buy Treasury bonds.

"We have successfully experimented with the first trading of Treasury bonds using DSE's trading system. The settlement of this transaction has been completed through Central Depository Bangladesh Limited (CDBL)," DSE Chief Operating Officer M Saifur Rahman Mazumdar told The Business Standard. 

"As an issuer, the Bangladesh Bank has made a depository account with CDBL. Buying and selling of bond units will be settled using this depository account. But we have worked harder regarding this. All beneficiary owner (BO) accounts cannot be involved in these transactions yet."

"We hope it will be possible to trade Treasury bonds like any other stock on the DSE's main trading platform in the next few months," he added.

"Treasury bonds were traded on the block market today (Thursday). Buyers and sellers are usually fixed in advance there," said a high official at the DSE.

"The Chittagong Stock Exchange (CSE) will organise multiple trading on 30 October. Therefore, more people will be able to take part in the transactions together there."

DSE arranged an inaugural function on the occasion of the first transaction of treasury bonds on an automated trading platform. Officials from the Bangladesh Bank, DSE and CSE were present at the programme.

Professor Dr Shaikh Shamsuddin Ahmed, a commissioner at the Bangladesh Securities and Exchange Commission (BSEC), said, "It's a tremendous milestone for us. To popularise Treasury bond trading, we need to simplify this trading system. And it should be open for all BO account holders. This will allow our investors to make their portfolios risk-free with a fixed income instrument."

"The capital market exposure limit for banks is an obstacle to boosting the bond market," BSEC Chairman Professor Shibli Rubayat-Ul-Islam said at a programme recently.

"Bonds do not get finance because they come under the purview of exposure limit when they get listed on the capital market," he said at a seminar on "Sustainable Finance in Bangladesh: Strategies and Options for Implementation."

Banks are allowed to invest 25% of their capital in the capital market which is called the exposure limit.

The Bangladesh Bank, BSEC, and National Board of Revenue have been working to boost Treasury bond transactions on stock exchanges since 2019. Their combined efforts have reduced taxes and trading fees on bond transactions.

At present, 221 treasury bonds with tenure from 5-20 years are listed on the DSE.

According to the central bank data, the interest rate for a five-year term Treasury bond is 5.76%, for 10 years 6.33%, for 15 years 6.44%, and for 20 years 6.50% till 13 October.