City Bank gets regulatory nod to issue bonds of Tk 12b

The market regulator has approved a proposal by City Bank to raise Tk 12 billion through a subordinated bond, aiming to strengthen its Tier-II capital base and support future lending operations.

Jamuna Bank and Trust Bank have also received extensions of regulatory approval up to September 30 this year to raise Tk 8 billion and Tk 5 billion respectively through subordinated bonds.

The approvals came at a meeting of the Bangladesh Securities and Exchange Commission (BSEC) on Tuesday, chaired by its Chairman Khondoker Rashed Maqsood.

Under the regulatory approval, City Bank will issue a seven-year subordinated bond, which will be unsecured, non-convertible and fully redeemable. The coupon rate has been structured as a floating benchmark, set at an additional 3 percentage points over the average interest rate of six-month fixed deposits (FDs), allowing returns to adjust in line with market conditions.

The bond will be issued through private placement among institutional investors, banks, corporate entities, individual investors and mutual funds. Each unit will have a face value of Tk 1 million, making it suitable mainly for high-value investors.

The proceeds from the bond will be utilised to finance lending across corporate, retail and small and medium enterprise (SME) segments, which continue to drive credit growth.

EBL Investments will act as the trustee to protect investors' interests, while City Bank Capital Resources and IDLC Investments will serve as arrangers.

The bond will be listed on the Alternative Trading Board (ATB), a platform for trading debt instruments and alternative assets.

Jamuna Bank and Trust Bank get time extension

The securities regulator has extended-for the final time-the consent letter validity of Jamuna Bank's Tk 8 billion floating-rate subordinated bond until September 30, 2026.

Similarly, the consent validity of Trust Bank's Tk 5 billion subordinated bond has been extended until September this year. In both cases, the existing terms and conditions will remain unchanged.

Both bonds are unsecured, non-convertible, redeemable, floating-rate subordinated bonds, which will be raised through private placement.

Jamuna Bank's bond has a face value of Tk 0.5 million, while the face value of Trust Bank's bond is Tk 0.1 million.

Subordinated bonds have become an important instrument for banks to meet regulatory capital requirements and strengthen their balance sheets, while also contributing to the development of the country's debt market.

In September last year, the market regulator allowed Jamuna Bank and Trust Bank to raise the said amounts through the issuance of subordinated bonds. However, both banks could not complete subscriptions and applied for a time extension. The extension is expected to help the banks complete the issuance process amid prevailing market conditions.

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