Central Bank starts publishing yield curve of government bonds

12-12-2023

12 December 2023, Baku: The Central Bank of the Republic of Azerbaijan starts publishing a weekly yield curve of government bonds on its website (https://www.cbar.az/home/chart?language=en) for the first time. The yield curve will be published on the first day of each working week until 16:00.

The yield curve is based on observations on transactions with government bonds in the national currency in primary and secondary markets. It is an important financial market indicator that reflects yield on bonds across different durations. This indicator reflects market participants' expectations regarding interest rates, monetary policy decisions, inflation, and economic growth. The yield curve is important for investors in assessing risks, as well as gains and losses. Interest rates on the yield curve are considered the reference (risk-free interest rates) for investors. In addition, the shape of the yield curve is an important source of information when predicting economic indicators and evaluating the effectiveness of monetary policy transmission.

The yield curve is estimated based on the ‘Regulations on evaluation and publication of the yield curve’ approved by the Management Board of the Central Bank. Along with the graphical representation of the yield curve, the parameters of the model (‘Nelson-Siegel’) used in the estimation of the curve will be published on the website of the Bank.

In international practice, central banks estimate and publish the yield curve. Note that, opinions of experts of international organizations regarding the model and observations used were also considered in the estimation of the yield curve.

Explanation on the yield curve methodology