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The Financial Express

IFC to issue taka bond on Bangladesh bourse

| Updated: September 11, 2021 12:12:19


IFC to issue taka bond on Bangladesh bourse

The International Finance Corporation (IFC) plans to issue taka-denominated bond on the Bangladesh market to extend financial support to domestic industries and agencies in need of funds.

Official sources said Friday the World Bank Group's private-sector-lending arm had recently sought approval from the government of Bangladesh for issuing the bond.

"IFC in a letter has requested us to get approval for its planned BDT-denominated bond. It wants to mobilise money from the domestic market in order to invest in local firms," said a senior Ministry of Finance (MoF) official.

He said they had sought opinion from different relevant government agencies, including the Finance Division, Financial Institutions Division as well as Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC), on this move by the international financial institution.

After getting their opinion, they would examine the proposal together and then the approval decision would be made, the official added.

A senior IFC official says they would issue the IFC's BDT-denominated bonds on the Dhaka Stock Exchange through securities regulator BSEC for mobilising the funds for the local industries and enterprises to be financed.

The official said the amount of the proposed bond was not fixed yet, but would be issued based on demands for investment by the local firms and industries.

"We would not repatriate the money to be mobilised from the bonds. We will invest all the funds in the projects of Bangladesh private-and public-sector industries," the IFC official said.

The IFC currently lends to different Bangladeshi private-sector companies and firms from its global funds. This time the Washington-based lender will provide money in local currency for ensuring extended funds and reducing currency- fluctuation risks.

Based on demands from the local companies, they plans to issue bonds on the Dhaka stock market for mobilising funds to lend the Bangladeshi companies and agencies, the official said.

When asked, Senior Country Officer at the IFC Bangladesh office Ms Nuzhat Anwar told the FE that Bangladesh's private-sector entities had a huge demand for funds for expanding their business and setting up new ventures and factories.

"The BDT-denominated bonds will help IFC in financing those local firms and agencies for expanding their business," she said.

Earlier, the IFC for the first time had issued BDT-denominated 'Bangla Bond' on the London Stock Exchange, worth Tk 800 million (US$9.5 million), to help expand operations and distribution of funds in Bangladesh.

The three-year bond, listed on the UK stock market, was placed with asset managers dedicated to emerging markets, with the deal arranged by Standard Chartered Bank and Bank of America Merrill Lynch.

The proceeds from the bond will be used to provide financing to Bangladesh's private enterprise PRAN Group to boost their processing capacities and deepen the rural distribution reach.

IFC bonds are rated triple--by Moody's Investors Service and Standard & Poor's.

A senior MoF official says the IFC had proposed to mobilise funds through the bonds to finance agriculture, manufacturing, and climate-related projects, and microfinance institutions.

It has a plan to finance Bangladesh's SMEs and women-owned firms and companies, he added.

Since the inception of the local currency-lending programme in the early 2000s, the IFC has extended more than $16 billion in financing to its clients globally, in more than 50 currencies, including the Indian Rupee, Chinese Renminbi, Brazilian real, South African rand, Turkish lira, Kazakh tenge, Sri Lankan rupee, Cambodian riel, Myanmar kyat and Russian ruble.

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