City Sugar, SAJIDA Foundation get nod for zero-coupon bonds

The securities regulator has approved two zero-coupon bonds-one by City Sugar Industries Ltd and another by SAJIDA Foundation-highlighting the growing reliance of large corporations on alternative financing instruments.

City Sugar Industries will collect Tk 13 billion through a three-year zero-coupon bond. The bond will be 100 per cent secured (mortgage-backed), non-convertible and fully redeemable, carrying an approximate discount rate of 13.50 per cent.

Each unit will have a face value of Tk 1.3 million, effectively limiting participation to large-scale investors. The bond will be issued through private placement to corporate entities, high-net-worth individuals, banks, financial institutions and insurance companies.

The proceeds will be utilised to repay existing high-cost liabilities to banks and financial institutions.

BRAC EPL Investments will act as trustee, while BRAC Bank will serve as the arranger. The bond will be listed on the Alternative Trading Board (ATB).

Established in 2006, City Sugar Industries is a concern of City Group and one of the largest sugar refinery units in Bangladesh.

SAJIDA Foundation to issue country's first Orange Bond

In a landmark move, the securities regulator also approved a proposal by SAJIDA Foundation to raise over Tk 1.58 billion through the country's first Orange Zero-Coupon Bond.

The bond will be non-convertible, fully redeemable and unsecured, with a discount rate ranging between 7.0 per cent and 11.50 per cent. Each unit will carry a face value of Tk 333,333.

The tenure of the bond will range from one to three years, offering flexibility to investors with varying investment horizons.

The bond will also be issued through private placement to institutional and high-net-worth investors. The proceeds will be used to expand SAJIDA Foundation's microfinance portfolio, focusing on financial inclusion, women entrepreneurs and empowerment initiatives.

The bond complies with international standards, with Impact Investment Exchange providing a Second Party Opinion (SPO) on its framework.

DBH Finance will act as trustee, while BRAC EPL Investments will serve as the arranger. The bond will also be listed on the ATB.

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

Last week, the regulator also approved a proposal by Akij Food & Beverage Ltd to raise Tk 5 billion through a zero-coupon bond.

Market insiders said that amid tight banking liquidity and relatively high borrowing costs, corporations are increasingly diversifying their funding sources. Structured instruments such as zero-coupon bonds allow issuers to align repayment obligations with long-term revenue generation.

Unlike conventional bonds, zero-coupon instruments do not offer periodic interest payments. Instead, they are issued at a discount and redeemed at face value upon maturity, enabling investors to earn a fixed return while allowing issuers to avoid immediate interest-servicing burdens.

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