Three banks to raise Tk2,100cr through bonds

Three private commercial lenders – Pubali Bank, Social Islami Bank, and Islami Bank Bangladesh Limited – received regulatory approvals to raise a hefty fund worth Tk 2100 crore from the capital market through bonds.

The Bangladesh Securities and Exchange Commission (BSEC), the securities regulator, approved the lenders’ bond proposals during a meeting chaired by its Chairman Shibli Rubayat Ul Islam on Tuesday.

According to the regulatory approval, Pubali Bank Limited would issue a non-convertible, privately placed, floating rate, 3rd subordinated bond to raise a fund worth Tk 700 crore.

The bank would utilise the fund to cement its additional tier-2 capital base, the BSEC said in a statement.

The fund would be raised through private placements with a unit price of Tk 1 crore each.

A six per cent base rate for the bond would enable investors to gain a ceiling of nine per cent secured annual return.

Financial institutions, insurance companies, corporate bodies, asset management companies, mutual funds, and high net-worth individuals are allowed to purchase the bond units through private placements.

DBH Finance would act as the trustee of the bond, while Standard Chartered Bank would be the arranger of the bond. The bond would be traded on the alternative trading board (ATB) of the Dhaka Stock Exchange (DSE).

At the same meeting, the commission approved the issuance of Social Islami Bank’s 4th non-convertible, unsecured, floating rate, and subordinated bond worth Tk 600 crore.

The bank would issue the bond to strengthen its Tier-2 capital base. Per-unit price of the bond has been fixed at Tk 1 core for private placement holders.

The BSEC also asked the company to get listed on the alternative trading board (ATB) of the bourses.

DBH Finance would act as the trustee of the bond, while Standard Chartered Bank would act as the arranger of the bond.

Besides, the BSEC also approved the Islami Bank Bangladesh Limited’s fourth mudaraba, redeemable, floating rate subordinated bond of Tk 800 crore.

The bond fund would be raised through private placements to institutional investors and high net-worth individual investors, as per the BSEC statement.

The face value of per unit of the bond would be Tk 10 lakh.

The bank would cement its Tier-II capital base by the fund raised through the bond.

Delta Brac Housing Finance Corporation (DBH) is acting as trustee for the bond. The bond would be listed on the bourse’s alternative trading board.

The BSEC, during the same meeting, also approved the draft prospectus of Gremeen Bank AIMS First Unit Fund, an open-end mutual fund.

According to the regulator’s statement, the primary target size of the fund is Tk 157.50 crore.

Of the fund, the sponsor-Grameen Bank would provide Tk 100 crore, and the remaining fund would be sourced through the sales of the units of the mutual fund to the investors at a face value of Tk 10 each.

Before, at least 22 companies raised Tk 8,847.65 crore worth of funds from the capital market by issuing bonds and preference shares in the outgoing year 2022. The BSEC approved the bond proposals of a larger number of companies this year to keep the country’s economy stable amidst the macroeconomic slowdowns caused by the Russia-Ukraine war.

With bond funds, the companies were expected to increase their capital base, helping the country’s economy recover at a faster pace hit hard by the war.

Some 21 firms last year were given nod to raise funds through the issuance of bonds. Of them, Beximco Limited alone raised Tk 3,000 crore by issuing Sukuk, an Islami Shariah-compliant financial instrument.

Financial institutions, insurance companies, corporate bodies, asset management companies, mutual funds, and high-net-worth individuals are eligible to purchase bond units through private placements.