Treasury bonds hit a milestone of multiple trading

Treasury bonds hit a milestone by being traded multiple times for the first time at the Chittagong Stock Exchange (CSE) on Sunday.

The port city bourse arranged the piloting of the multiple trading of government-owned treasury bonds to observe if any technical issues arise or not.

On that day, four bonds with the tenure of two years and 10 years changed hands.

Individual investors Amirul Islam, MTB Unit Fund, Sandhani Asset, and City Brokerage bought the bonds.

The trading took place through Dhaka Bank Securities, Mona Financial Consultancy and Securities, Square Securities, City Brokerage, and LankaBangla Securities.  

"This is a milestone and a great thing for our stock market," Professor Shaikh Shamsuddin Ahmed, commissioner of the Bangladesh Securities and Exchange Commission (BSEC), said at the inaugural ceremony on the experimental transactions.  

"We have a lot of government bonds which are held by a few people. To enable the commoners to transact, initiatives have been taken to introduce government securities at the stock market."

Earlier on 14 October, the trading of government treasury bonds has resumed after 16 years on the secondary market of the Dhaka Stock Exchange (DSE).

On that day, 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.

At present, there are 264 treasury bonds worth more than Tk2.5 lakh crore with their tenures ranging from two years to 20 years, data from the central bank showed.

Out of which, 222 treasury bonds with tenures from 2-20 years are listed on the stock exchanges. But since 2005, no bonds were traded on the secondary market of the stock exchanges.

Experts said the problems related to the settlement of the trading of treasury bonds and a higher tax had prevented the government securities from being traded on the exchanges.

The Bangladesh Bank, the BSEC, and the 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.

All of the problems have now been solved, paving the way for retail investors to take part in the trading.

CSE officials said within December this year they could run the trading of bonds on the main platforms of both the stock exchanges.

"We have a lot of investors here who want to invest risk-free. Treasury bonds are the best options for them," Nafeez Al Tarik, managing director of Dhaka Bank Securities, told The Business Standard.

"The biggest advantage of Treasury bonds is that there is no capital loss. Where investing in equity markets or stocks has the possibility of capital loss.

According to the central bank data, the interest rate for a two-year term Treasury bond is 4.13%, for five-year 5.75%, for 10 years 6.80%, for 15 years 7.19%, and for 20 years 7.44% till 27 October.