The Dhaka Stock Exchange (DSE) experienced an unexpected surge in Treasury bond trading on Monday, drawing significant attention from investors and analysts. A 20-year Treasury bond, identified as TB0744, recorded an extraordinary single trade involving 400,000 units worth BDT 427.5 million (42.75 crore). The sudden spike in activity has sparked curiosity and speculation, as government securities typically see minimal trading on the stock exchange.
This single transaction propelled the bond to the top of the DSE’s daily trading chart, an unusual development given that Treasury bonds are not among the most actively traded securities. Market participants were left questioning who the buyer and seller were and what motivated such a substantial trade in a usually dormant segment.
Breakdown of the Unusual Trade
According to DSE data, the entire transaction was executed through ICB Securities Trading, a brokerage house affiliated with the state-owned Investment Corporation of Bangladesh (ICB). Investigations revealed that the trade took place between two mutual funds under ICB’s management—one fund selling the bonds, while another acquired them.
Confirming the transaction, Arifur Rahman, Deputy Chief Executive of ICB Securities Trading, stated that it was an internal restructuring between ICB-managed funds. While the trade itself does not indicate an external market-driven demand, it does highlight the increasing role of institutional investors in the government bond market.
The TB0744 bond was issued on July 28, 2024, and listed on September 8, 2024. It carries a coupon rate of 12.75% and has a maturity date of July 28, 2044. Following the transaction, the bond’s price rose by 1.31 BDT (approximately 1.23%), closing at 106.88 BDT per unit. The total issuance volume of the bond stands at 216.68 million units.
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Historical Context: Treasury Bond Trading in DSE
This event has drawn comparisons to October 14, 2021, when DSE resumed Treasury bond trading after a 16-year hiatus. Treasury bonds were initially introduced to the DSE in 2005, but due to low investor interest and a lack of awareness, trading was negligible. By 2021, there were 221 Treasury bonds listed, but they remained largely inactive in the secondary market. The 2021 resumption was a historic moment, and the first transaction involved a 10-year Bangladesh Treasury Bond, where 1,000 units were traded at 110.50 BDT per unit, a 10.5% premium over the face value. This trade was executed between VIPB Accelerated Income Unit Fund (seller) and Alliance Capital Asset Management (buyer), facilitated by City Brokerage Limited and MTB Securities (Source: TBS News). The reintroduction of Treasury bond trading was a joint initiative by the Bangladesh Bank, Bangladesh Securities and Exchange Commission (BSEC), and National Board of Revenue (NBR). The goal was to create a more active bond market, reduce tax and trading fees, and provide investors with low-risk investment options.
Implications for the Bangladesh Bond Market
The unexpected TB0744 transaction raises several key questions about the future of Bangladesh’s bond market:
•Is Institutional Bond Trading Increasing?
The fact that a single entity (ICB) facilitated such a large trade within its own funds suggests that institutional investors are becoming more active in government bonds.
•Will Secondary Market Liquidity Improve?
One of the biggest challenges for Bangladesh’s bond market has been low liquidity in the secondary market. If more mutual funds and financial institutions engage in such transactions, it could lead to greater price discovery and investor participation.
•Government’s Role in Expanding the Market
The Bangladesh government, through Bangladesh Bank and BSEC, has been working to promote Treasury bonds as a viable alternative to traditional stock investments. If more large transactions occur, policy adjustments may be necessary to regulate and enhance secondary market trading.
•Market Reaction and Future Outlook
Following the TB0744 transaction, market experts and analysts are closely monitoring whether this trade was a one-time internal adjustment or if it signals a new phase of increased bond trading in Bangladesh. While institutional involvement is a positive step, retail investor participation remains limited.
To truly develop a robust bond market, financial regulators and the government must:
•Enhance investor awareness about Treasury bonds as an investment option.
•Improve market transparency so that trades like TB0744 do not trigger unnecessary speculation.
•Encourage more financial institutions to participate in secondary bond trading.
If such large-scale transactions continue, the DSE Treasury bond market may finally reach its full potential, providing investors with secure, fixed-income investment opportunities while also supporting government fundraising efforts.
Conclusion
The 400,000-unit TB0744 trade on March 24, 2025, is a significant moment for the DSE bond market. While this transaction was largely an internal trade between ICB-managed mutual funds, its sheer volume makes it one of the largest Treasury bond transactions in DSE history. The last major Treasury bond milestone occurred in 2021, when trading resumed after a 16-year break. Since then, while activity has increased, bond trading remains far below its potential. Moving forward, Bangladesh’s financial regulators and policymakers must capitalize on this momentum to foster a more liquid and investor-friendly bond market. Whether Monday’s trade was an outlier or a sign of a new trend will become clearer in the coming months. Investors, analysts, and policymakers will be closely watching.
