Tk7,650cr bonds in the pipeline

Sixteen listed companies including banks and financial institutions and a non-government organisation (NGO) are awaiting regulatory approval to issue bonds worth Tk7,650 crore.

The Bangladesh Securities and Exchange Commission (BSEC) is scrutinising the applications.

The banks and financial institutions want to raise funds to strengthen their capital base while other firms have plans to spend the proceedings on expanding their business.

Facing scarcity of funds from both local and foreign sources, the NGO has chosen the capital market as a preferred place to raise money amid the pandemic.

Most banks will come up with perpetual bonds which have no tenure.

According to the BSEC decision, issuers must float 10% units of their perpetual bonds through public offerings and the bonds must be tradable on local bourses.

BSEC Executive Director Mohammad Rezaul Karim has recently said the long-term financing through debt securities has increased after the formation of rules and regulations, and the development of infrastructure.

He said the commission is working to create opportunities for intuitional investors so that they can invest easily in debt securities.  

To build a vibrant bond market, the regulator is trying to open an alternative trading board (ATB) and Central Counterparty Bangladesh Ltd (CCBL), he added.

Emranul Huq, managing director and chief executive officer at Dhaka Bank, had earlier told The Business Standard that they would invest heavily in a number of sectors over the next five years.

He said bad debts were likely to increase due to the Covid-19 pandemic impacts, which would reduce the capital adequacy ratio (CAR).

The capital raised through bonds would strengthen the capital-to-risk weighted-asset ratio (CRAR), which is widely known as the CAR.

"That is why we are strengthening capital by issuing bonds as per the Basel III requirement. This is because our lending or investment capacity will reduce if the CAR goes down," he explained.

Bank Asia will raise Tk500 crore, Mercantile Bank Tk700 crore, Standard Bank Tk500 crore, Dhaka Bank Tk400 crore, Pubali Bank Tk500 crore, Premier Bank Tk400 crore, and AB Bank Tk600 crore by issuing perpetual bonds.

NCC Bank wants to raise Tk700 crore, NRBC Bank Tk500 crore, Brac Bank Tk600 crore, Dutch Bangla Bank Tk500 crore, and Meghna Bank Tk400 crore through issuing subordinated bonds.

Besides, non-bank financial institutions Bangladesh Finance and Investment Company will raise Tk200 crore, DBH Finance Corporation Tk300 crore, and Strategic Finance and Investment Limited Tk500 crore by issuing bonds.

BURO Bangladesh, an NGO, and United Airways want to issue Tk150 crore and Tk200 crore bonds, respectively.

Besides, City Bank and Southeast Bank have already declared to raise Tk700 crore each through bonds.