Funding thru’ bonds fell by 28 pc in 2022
Golam Mostafa Jibon: The fund collection through issuing bonds has decreased by 28 percent in the last one year.
In the past a year, 22 companies have raised funds of Tk 8,847 crore through bond issue in the country’s stock market with the aim of business expansion.While it was the previous year, companies had raised Tk 12,326 crore by issuing bonds from the stock market.
Due to the Russia-Ukraine war, the macroeconomics is going through a very critical period. In such a situation and to keep the country’s economy stable, BSEC has approved the bond proposals of several companies.
Companies had expected to increase their capital base by issuing bonds. The economy of the countries affected by the global recession has helped quite well to recover quickly.
Ershad Hossain, Managing Director of City Bank Capital Resources Limited said, “Raising funds through bonds can reduce the pressure on the country’s banking sector.”
Last year 21 institutions were allowed to raise funds by issuing bonds. Of them, Beximco Limited alone has raised Tk 3,000 crore by issuing Islamic Shariah-compliant bond Sukuk. Beximco was the first company in the country to raise funds by issuing Sukuk bonds.
Financial institutions, insurance companies, corporate bodies, asset management companies, mutual funds and individual institutions have raised money through bond units through placement. Bonds are generally less risky than any other stock.
At the same time, bonds offer higher returns than any other share. Bondholders are only creditors, not owners, of a company according to securities regulations.
Asif Saleh, Executive Director of BRAC said, “Our plan was to diversify our sources of funding to reduce the dependence on foreign funds.Issuing bonds for sourcing funds is a new way of financing microcredit. That is why, we are raising funds through bonds.”
Commenting on this, BSEC Chairman Shibli Rubayat-ul-Islam said, “Our stock market has been equity-based for a long time. We are now focusing on bonds, debentures, Sukuk and other alternative investment options to make the market more vibrant.”
Notably, in March 2022, the Bank Asia received approval from the securities regulator to issue perpetual bonds of Tk 500 crore to strengthen its additional Tier-1 capital base.
In the same month, BSEC approved the issuance of Tk 500 crore perpetual bonds by Mercantile Bank. The bank has issued bonds to strengthen its additional Tier-1 capital base.
Another private commercial bank, Dhaka Bank Limited, has received regulatory approval to issue perpetual bonds worth Tk 200 crore. Besides, National Polymer Industries Limited has issued zero coupon bonds of Tk 300 crore.
On the other hand, Mir Akhtar Hossain Limited (MAHL) has issued 4-year non-convertible, fully redeemable, zero-coupon bonds of Tk 249.9 crore.
The issue price of the bond was Tk 207.18 crore with a face value of Tk 5 lakh per unit. Envoy Textiles has also issued a non-convertible zero-coupon bond of Tk 200 crore at a coupon rate of 6.5 percent to 7.5 per cent.
Of the funds, the company used Tk 168.4 crore to finance its new gas-based 19 MW captive power plant and repay bank loans.
Apart from them, Alif Industries Ltd has issued floating rate, convertible bonds worth Tk 300 crore to revive the scam-hit C&A Textiles.
Tk 300 crore bond of Bongo Building Materials Limited was a non-convertible, secured, fully redeemable, asset-backed andSukuk bond.
In 2021, BSEC approved Beximco Limited to issue Islamic Shariah-compliant Sukuk worth Tk 3,000 crore, the first approval for raising funds through Sukuk in the country.
In 2022, the stock market regulator allowed City Bank to raise Tk 700 crore by issuing bonds to strengthen its capital base.
With an 8-year maturity, the subordinated bond is an irrevocable, unsecured, and fully repayable floating rate debt instrument.
BSEC has allowed IFIC Bank to issue Tk 500 crore subordinated bonds through private placement to strengthen its Tier-II capital base.
Among others, Trust Bank was approved to raise Tk 400 crore by issuing bonds, while Tk 400 crore to One Bank, Tk 500 crore to Al-ArafahIslami Bank, Tk 500 crore to Eastern Bank, Tk 500 crore to NRBC Bank, Tk 500 crore to Mutual Trust Bank, Tk 150 crore to IPDC, Tk 600 crore to Premier Bank and Tk 1,000 crore to United Commercial Bank were given approval.
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