Bangladesh Bank (BB) has issued a 16-point guideline to undertake buy-back programme for the government treasury bonds or bills aiming to reduce the number of government securities.
To keep pace with the other countries of the world, the government is going to take buy-back programme of the government securities for balancing the redemption profile and reducing the number of government securities, according to a BB circular issued today.
On behalf of the government, the central bank issued terms and conditions to implement the overall buy-back programme.
As per auction calendar determined by the Finance Division, the buy-back programme will be operational through reverse auction or over the counter (OTC) transaction, the circular says.
The buy-back of treasury bills or bonds will be accomplished in the face value of Taka one lakh or multiple of Taka one lakh and all banks and non- bank financial institutions (NBFIs), which maintain current accounts with Bangladesh Bank, can participate directly in the buy-back programme.
All other resident or non-resident individuals and institutions, who have no current accounts with the central bank, can participate in the auction through the banks and NBFls, the BB circular says.
In case of OTC, price will be determined through negotiation between Bangladesh Bank and the securities seller. The negotiated price and accrued interest of the securities will be payable to the sellers of the securities.
In case of reverse auction, multiple price based method will be followed. On the basis of auction result, the settlement price and calculated accrued interest will be paid to the banks or non-bank financial institutions by crediting the current accounts maintained with Bangladesh Bank.
The bids will be opened at 1 pm and result of the auction will be announced by 3 pm on the same day. Each and every institution can offer different price for each security. In this case, separate bids have to be submitted for different price.
Bidders can offer price in discount or premium or face value based on the market price. Winner bidders will be paid their offered price and accrued interest calculated from issue date of original bills or bonds or last coupon date to previous date of buy-back, according to the BB circular.