Bangladesh Government Treasury Bonds Explained: Why They Are (Almost) Risk-Free, and Every Bond Term You Need
If you want your money to earn a steady return without worrying whether the issuer will pay you back, Bangladesh Government Treasury Bonds are the place to start. They are the safest taka investment most retail investors can get. But “safe” does not mean “nothing can go wrong”, and the bond market uses a lot of jargon. This guide covers both: why treasury bonds are called risk-free, the honest caveats, and every term you need, with simple worked examples.
What is a Bangladesh Government Treasury Bond?
A Bangladesh Government Treasury Bond (BGTB) is a loan you make to the Government of Bangladesh. You lend a fixed amount. The government pays you interest every six months and returns your money in full on a fixed date.
Bangladesh Bank issues the bonds on the government’s behalf through regular auctions. BGTBs come in five tenors (lengths of time): 2, 5, 10, 15 and 20 years.
T-bills vs T-bonds
The government also borrows short-term through Treasury bills (T-bills), typically with 91, 182 or 364-day maturities. The two differ in a few ways:
| Treasury bills | Treasury bonds | |
|---|---|---|
| Term | Under one year | 2 to 20 years |
| How you earn | You buy below face value and get the full face value at maturity. There is no coupon. | A fixed coupon every six months, plus face value at maturity |
| Best for | Parking cash for a short time | Locking in income for years |
Why treasury bonds are called “risk-free”
Every investment carries credit risk, the chance that the borrower fails to pay. With a company bond or a bank deposit, you rely on that institution staying healthy.
A BGTB is different for two reasons:
- It is sovereign. The borrower is the Government of Bangladesh, the strongest borrower in the country.
- It is in taka. The government owes you taka, and Bangladesh controls its own currency. It can always meet a taka payment, so the chance of a default is close to zero.
That is why finance professionals use the treasury yield as the “risk-free rate”, the benchmark every other investment is compared against.
The honest caveats
“Risk-free” means default-free. It does not protect you from these four risks:
- Interest-rate (price) risk. If you sell before maturity, the price depends on market rates at that time. If rates have risen since you bought, your bond sells for less than you paid. If you hold to maturity, you get the full face value back.
- Inflation risk. Your coupon is fixed, but prices are not. Bangladesh’s inflation was 8.34% in September 2026 (BBS). Treasury yields are now around 8.5% to 9.3%, and the coupon is taxed, so the real (after-inflation) return is thin.
- Reinvestment risk. When a coupon arrives or the bond matures, rates may be lower, so you may have to reinvest at a worse yield. Yields were above 10% earlier in 2026. The 10-year was 10.37% in February. They have since fallen below 9%.
- Liquidity risk. Trading in treasury bonds on the stock exchange is still thin. On a given day you may not find a buyer at the price you want. You cannot cash in early with the government, so you would have to sell in the market.
Current yields at a glance
Cut-off yields from recent Bangladesh Bank auctions, as listed on Mika Securities’ treasury bond page on 1 October 2026:
| Tenor | Cut-off yield |
|---|---|
| 2 years | 8.87% |
| 5 years | 8.65% |
| 10 years | 8.54% |
| 15 years | 9.34% |
| 20 years | 9.34% |
Yields change with every auction. On 2 August 2026, Bangladesh Bank cut its policy rate from 10% to 9.50%. Yields usually move in the same direction as the policy rate.
The bond glossary, with worked examples
All examples below use one simple bond: face value Tk 1,00,000, coupon 9%, 10 years to maturity. These are round illustrative numbers, not a specific live issue.
Face value
The amount the government repays at maturity. It is also the base for calculating interest. Here it is Tk 1,00,000. The minimum auction bid is Tk 1 lakh, and you can bid in multiples of that.
Coupon rate and half-yearly coupon payment
The coupon rate is the fixed annual interest rate, calculated on face value. BGTBs pay it in two halves, one every six months.
- Annual coupon: 9% × Tk 1,00,000 = Tk 9,000
- Each half-yearly payment: Tk 4,500
- After 10% tax at source: Tk 4,500 − Tk 450 = Tk 4,050 credited
Maturity
The date the bond ends and the government repays the face value. Our bond matures in 10 years. On that date you receive Tk 1,00,000 plus the final coupon.
Yield
The return you actually earn. It depends on the price you pay, not just the coupon. If you pay exactly face value, the yield equals the coupon. If you pay less, your yield is higher. If you pay more, it is lower.
Current yield
A quick measure: annual coupon ÷ current price. If you buy our bond at Tk 95,000, the current yield is 9,000 ÷ 95,000 = 9.47%. It ignores the gain you will make when the bond is repaid at Tk 1,00,000.
Yield to maturity (YTM)
The full annual return if you buy today and hold to maturity. It counts every coupon plus the gain or loss between your purchase price and face value. When people quote a bond’s “yield”, they usually mean YTM. Bought at Tk 95,000, our bond’s YTM is a little above its 9.47% current yield, because the extra Tk 5,000 arrives at maturity.
Cut-off yield
In an auction, investors bid the yield they want. Bangladesh Bank accepts bids from the lowest yield upward until it has raised the amount it needs. The highest yield it accepts is the cut-off yield. It is the headline rate you see reported after each auction, such as 8.54% for the 10-year above.
Price and yield move in opposite directions
This is the most important idea in bonds. Your 9% coupon is fixed. If new bonds start paying 10%, nobody will pay full price for your 9% bond, so its price falls until its yield matches the market. The reverse is also true.
| Market yield on our 10-year, 9% bond | Approximate price (per Tk 100 face value) |
|---|---|
| 8% | Tk 106.80 (premium) |
| 9% | Tk 100.00 (par) |
| 10% | Tk 93.77 (discount) |
A one-percentage-point move in rates shifts this 10-year bond’s price by about 6 to 7%. If you hold to maturity, these swings do not matter, because you still get the full Tk 1,00,000 back.
Par, premium and discount
- Par: price equals face value (Tk 100 per Tk 100). Yield equals coupon.
- Premium: price is above face value. Yield is below coupon.
- Discount: price is below face value. Yield is above coupon.
Accrued interest
Coupons are paid every six months, but interest builds up every day. If you buy a bond between coupon dates, you pay the seller the interest they have earned so far. On the next coupon date, you receive the full coupon.
Example: you buy two months after the last coupon. Accrued interest = Tk 4,500 × 2/6 = Tk 1,500.
Clean price vs dirty price
- Clean price: the quoted price, without accrued interest. Say Tk 98 per Tk 100, which is Tk 98,000 for our bond.
- Dirty price: what you actually pay, which is clean price plus accrued interest. Tk 98,000 + Tk 1,500 = Tk 99,500.
Prices are quoted clean so they do not jump every time a coupon is paid.
Duration (the simple version)
Duration measures how sensitive a bond’s price is to interest rates. As a rule of thumb: price change ≈ −duration × change in yield.
- Our 10-year, 9% bond has a duration of about 6.5. If yields rise by 1 percentage point, its price falls by roughly 6.5%.
- A 2-year, 9% bond has a duration of about 1.8. The same 1-point rise cuts its price by under 2%.
Longer bonds have higher duration and bigger price swings. If you might need the money early, shorter tenors are safer.
Primary auction vs secondary market
- Primary auction: you buy new bonds directly from Bangladesh Bank’s auction, at the cut-off yield or the yield you bid. Auctions are held on set Tuesdays for each tenor.
- Secondary market: you buy from, or sell to, other investors. Treasury bonds have traded on the Dhaka Stock Exchange since October 2022, so you can trade them through a broker much like shares. Volumes are still low, so check the price and depth before placing an order.
Yield curve
The yield curve is a line connecting yields across tenors. Normally it slopes upward, because lenders want more for locking money away longer. Today’s curve is unusual. Yields dip from 8.87% at 2 years to 8.54% at 10 years, then rise to 9.34% at 15 and 20 years. A dip like this often means the market expects rates to fall, which fits with the recent policy rate cut.
How a retail investor buys treasury bonds
- Open a BO account. Bonds are held electronically in your Beneficiary Owner (BO) account at CDBL, the same account you use for shares. You can open a BO account online with Mika Securities.
- Choose a route. Bid in a primary auction (minimum Tk 1 lakh) or buy listed bonds on the DSE secondary market.
- For an auction: choose the tenor, enter your bid amount and fund your account before the deadline. Your broker submits the bid. If your bid is accepted, the bonds are delivered to your BO account after settlement.
- Collect coupons. Coupons, after 10% tax at source, and the maturity amount are paid out to you.
Mika Securities, a DSE member since 2005 (TREC No. 215) and a CDBL depository participant, offers treasury bond investing. Our team handles the auction application and paperwork for you. See the current yields, auction calendar and application steps on our treasury bond page. New to the market? Start with our guide to the basics of the Bangladesh stock market.
Who treasury bonds suit
- Income seekers: retirees or anyone who wants predictable cash every six months.
- Cautious savers: people who want a sovereign-backed alternative to bank deposits.
- Portfolio balancers: share investors who want a stable anchor alongside more volatile stocks.
- Goal planners: anyone saving for a known future cost, such as school fees in five years, who can match the bond’s tenor to that date.
They suit you less if you might need the money at short notice, or if you want returns well ahead of inflation. For long-term growth, shares remain the main tool, with higher risk.
The bottom line
Treasury bonds are as close to default-free as a taka investment gets. You know exactly what you will receive and when, as long as you hold to maturity. The real risks are selling early when rates have risen, inflation eating into a fixed coupon, and a thin secondary market. Match the tenor to when you need the money, and treasury bonds can be a steady part of any portfolio.
This article is for general education only and is not investment advice. Investment carries risk; past performance does not guarantee future returns. Figures cited are from public sources as of October 2026.