Goldman Sachs seeks to be adviser on sovereign bonds

Bangladesh can raise $2-$3 billion from the international market through sovereign bonds, Goldman Sachs, the world's leading investment bank, said as it seeks to advise the government on its first sovereign bond issue.

The disclosure came at a meeting yesterday between Goldman bankers Jonathan G Donne, Paul Rhodes and Ryad Yousuf and Finance Minister AMA Muhith at the latter's office in Dhaka.

“They said now is the opportune moment to issue sovereign bonds as the interest rate in the international market is low and the image of Bangladesh is very good,” Muhith told reporters after the meeting quoting the Goldman bankers.

Besides, raising funds from external sources now will help as the country prepares to implement mega-projects such as Padma bridge and a new pay-scale for about 16 lakh civil servants, according to the finance minister.

The current foreign exchange reserves of over $22 billion can feed seven months' import bills. “If the reserves go up further it would be good for the economy,” he said, adding that the government is looking to issue the bond this fiscal year.

It will take about three months to raise funds from the international market should Bangladesh issue the bond now, the finance minister said.

“We can raise up to $5 billion if we bargain,” he said quoting the Goldman bankers. He, however, signalled that the government would start off with a small number of bonds.

The prospect of raising funds through sovereign bonds was first entertained during the Awami League government's previous term, with a Sovereign Bond Transaction Executive Committee formed last year.

The panel submitted its recommendations in March this year, where it advised a sum of $500 million, to be used primarily for developing infrastructure.

Some foreign banks operating in Bangladesh have already expressed their interest in acting as advisors for the issuance of the bond, according to finance ministry officials. Proposals from all interested parties would be considered before selecting the best one, they added.

The government though has to check with the World Bank, from whom it currently receives low-cost loans, before it decides to roll out sovereign bonds for conflict of terms and conditions.

Muhith said that the government is also considering issuing Islamic bonds.

Prime Minister Sheikh Hasina's Economic Affairs Adviser Mashiur Rahman, Energy Adviser Toufiq-e-Elahi Chowdhury and Bangladesh Bank Governor Atiur Rahman among others were present at the meeting.