What is Treasury Bond?

Author: Bibi Amana
Published on: 26/Nov/2022


What is Treasury Bond?

Government Security which is tradable instrument issued by Government acknowledges the Government's debt obligation. Long-term Security is usually called Government bonds or dated securities or Treasury bonds with an original maturity of one year or more.   Bangladesh Bank (BB) Order-1972, article 20 empowers Bangladesh Bank to issue Treasury Bond and manage public debt for the Government.

Features of Treasury Bonds

  • A risk-free fixed coupon-bearing debt instrument
  • Maturities are available within 2-20 years.
  • It carries half yearly coupon payment and the principal is repaid on maturity.
  • Yield is determined by the market.      
  • Tradable instrument in the secondary market.
  • Issued in the scriptless form

Benefits of Treasury Bonds

  • It is an absolutely risk-free investment since it is issued by the sovereign government.
  • One can get an attractive rate of interest since the yield is determined in the market.
  • Since these bonds are tradable in the secondary market, one can obtain instant liquidity by selling them in the market.
  • All receipts of interest and maturity are fully repatriable in case of foreign investment.

Trading system of Treasury Bonds at DSE and CSE

  • Trading of Treasury Bonds can be executed at the stock exchange platform by using the existing BO ID.
  • There are 250 Treasury Bond issued by Bangladesh Bank
  • The minimum bid amount is Taka one lac/0.1 million and its multiples.
  • No, premature encashment is not available
  • Holders can sell in the secondary market.
  • The maturity of Treasury Bonds shall be as like a normal share. i.e. (T+0 and T+2)
  • Transaction charge/fee: 0.10% on the trade value
  • The trading of the Treasury Bond shall remain suspended for two days prior to the coupon payment date. There shall be no spot trade.
  • Tick size: Tk. 0.0001
  • Minimum Lot size: 1000
  • Face value: Tk. 100
  • Circuit Breaker/ Circuit filter: 2% (+/-)
  • Trading of Treasury Bonds shall be executed at a clean price but settlement shall be at a dirty price. i.e. buyer should pay Dirty price=clean price (the value derived at the present value) + accrued interest (seller holdings period profit)
  • Stock broker participants shall keep updated BO ID detail’s with nominee information on at least half yearly basis.





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