IFC wants to issue $4b bond in local market

International Finance Corporation (IFC) wants to issue taka denominated bonds worth $4 billion, either through public issuance or private placement, among local investors to lend the proceeds to projects in Bangladesh. 

It has already issued local currency bonds among domestic investors in the Philippines and India, where the funds were lent to priority sectors.

Earlier, the IFC successfully issued a three-year Tk 80 crore taka-denominated bond, coined "Bangla Bond", at London Stock Exchange.

Its iconic bell ringing ceremony was held in November 2019 and the proceeds were used to support food safety with an agribusiness client in Bangladesh.

Stock market analysts welcome the move, saying it would inspire local stock investors to make new investments in the bond market.

The World Bank Group member sent a letter to the Ministry of Finance last year requesting approvals required under its "Articles of Agreement".

In response, the ministry sent a letter to the Bangladesh Securities and Exchange Commission (BSEC) asking whether the stock market regulator has any objection.

The BSEC replied it had none. "However, the IFC will have to apply and take approval to issue bonds from the BSEC following the securities rules and regulations," it said.

The IFC is keen to expand its financing in taka for clients in Bangladesh who do not generate US dollars as a part of their daily operations, the IFC said in its letter.

The bonds will help support the growing financing needs of various priority sectors, including agriculture, manufacturing, those related to climate change, microfinance and lenders focusing on small and medium enterprises and women-owned enterprises.

It will also support the government's efforts to develop and grow the domestic capital market in Bangladesh.

BSEC Chairman Prof Shibli Rubayat-Ul-Islam agreed that the bond would give new impetus to the development of the country's bond market.

The BSEC is trying to make the bond market vibrant as the market can give a good source of funds to entrepreneurs, he said.

It has already made treasury bills and bonds tradable on the stock exchanges with the help of Bangladesh Bank and the National Board of Revenue.

There are about 270 treasury bonds worth more than Tk 2.5 lakh crore and with tenures ranging from two years to 20 years, showed data from Bangladesh Bank.

Of them, 222 were listed on Dhaka Stock Exchange (DSE) as of August, with a combined value of Tk 59,359 crore.

But they were not traded like shares and mutual fund units, which require availing a beneficiary owner's account first.

Rather they could be bought and sold straight over the counter, much like savings certificates.

"The IFC wants to issue bonds worth $4 billion and the IFC is not alone. Asian Development Bank (ADB) also wants to issue bonds in the Bangladesh stock market. It would be better for our stock market," added Islam.