Bangladesh
6 months ago

Perpetual bonds of Mercantile Bank trading debut today

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Trading in the Mercantile Bank Perpetual Bonds will commence on the Dhaka Stock Exchange and the Chittagong Stock Exchange today (Tuesday) as 10th perpetual bonds under settlement category 'N'.

A perpetual bond is a fixed-income security with no maturity date and is often considered a type of equity rather than debt. This type of bonds is not redeemable. It instead provides a never-ending stream of interest payments.

Mercantile Bank, a listed private commercial bank, raised Tk 5 billion by issuing perpetual bonds, aimed at strengthening additional Tier-l capital.

Out of Tk 5 billion, the bank raised Tk 4.50 billion (90 per cent) through private placements and the remaining Tk 500 million (10 per cent) through public offer, as per the regulatory requirement.

The Bangladesh Securities and Exchange Commission (BSEC) accorded its consent to the bank for raising additional Tier-l capital through perpetual bonds on March 22 last year.

The coupon rate will be 6 per cent to 10 per cent.

Meanwhile, the stock of Mercantile Bank, which was listed on the DSE in 2004, has been stuck at the floor price of Tk 13.30 since May this year.

The bank's consolidated earnings per share (EPS) stood at Tk 2.11 for January-September 2023, down from Tk 3.19 for the same period a year earlier.

According to the BSEC (Debt Securities) Rules, 2021 and a directive issued on May 23, 2021, if an issuer intends to raise debt capital through issuance of perpetual bonds, it shall make a public offer for at least 10 per cent of the bonds, which must be listed on the bourses.

Previously, the perpetual bonds were issued only through private placement, and they were not tradable in the stock market.

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