Country’s first perpetual bonds get BSEC nod
Both City Bank and Jamuna Bank got the greenlight from the Bangladesh Securities and Exchange Commission (BSEC) to begin issuing perpetual bonds of Tk 400 crore each to strengthen their additional tier-1 capital base.
A perpetual bond is a fixed income security with no maturity date and is often considered as a type of equity rather than debt. These types of bonds are not redeemable but instead provide a never-ending stream of interest payments.
Having been granted approval during a meeting at the BSEC office yesterday, these are the first perpetual bonds in Bangladesh's history.
During the commission meeting, the BSEC also decided to fine the directors of Intech Limited, MI Cement, Al Faruque Bags, BMSL Investment, IIDFC Capital and Artisan Chartered Accountants for breaching securities rules and regulations.
The perpetual bonds will be unsecured and feature a floating rate while the coupon rate is 11-14 per cent.
City Bank Capital is the arranger of the bonds in Bangladesh.
Previously, the market was dominated by tier-2 bonds. City Bank Capital was the company to initiate the process to bring this Basel-3 compliant new financial instrument to the market.
The fund will be raised from listed banks, insurance companies, regional rural banks, private organisations, trust funds and eligible investors though private placement. The price per unit of each bond is Tk 10 lakh.
Intech, a listed company, did not provide any price sensitive information on its new ventures in the fishing and resort industries or its withdrawal of investments in certain sectors.
The company's directors also failed to maintain the required minimum for shareholding, which is a breach of the securities rules, the BSEC said in a press release, adding that the commission decided to fine the directors Tk 25 lakh each.
Meanwhile, Al Faruque Bags, which submitted an initial public offering (IPO) prospectus to the BSEC in order to raise fund from the capital market, did not issue corporate governance code certificate.
Instead, its auditor took up the task, which is also a breach of the securities rules, the BSEC said in its statement.
Considering their actions, the BSEC will fine the directors of Al Faruque Bags Tk 10 lakh each while the directors of Artisan Accountants, the firm that issued the certificate, will be fined Tk 2 lakh each.
The company's issue managers at BMSL Investment and IIDFC Capital will face a Tk 5 lakh penalty.
MI Cement, a listed cement manufacturer, provided a Tk 70.40 crore interest-free loan to its sister concern. In the past, MI Cement provided similar loans to its sister concern despite the fact that its directors have full ownership of the branch company.
However, the cement manufacturer financed these loans without approval from its general shareholders, which is a breach of BSEC guidelines.
Therefore, the stock market regulator decided to fine the directors of MI Cement Tk 10 lakh each, the BSEC statement read.
At the commission meeting, BSEC approved the IPO of Walton Hi-Tech Industries to raise Tk 100 crore through the issuance of 29.28 lakh shares.
General investors can purchase stock in the company through the IPO at Tk 252 per share, which is 20 per cent lower than the cut-off price. Through bidding among eligible investors, the cut-off price was set at Tk 315.
The BSEC also approved the RACE Special Opportunities Unit Fund, an open-ended mutual fund with a primary target to raise Tk 35 crore.
Of that amount, Tk 25 crore would be financed by Premier Bank while the rest will be raised through general investors.
Comments