The International Finance Corporation (IFC), the private sector financing wing of the World Bank Group, has issued its inaugural bond in Bangladeshi taka, raising Tk80 crore – equivalent to approximately $9.5 million.
Before ringing the bell for listing Bangla Bond on the London Stock Exchange, investors subscribed for units 30 percent higher than the IFC offer, according to sources with knowledge of the matter.
The bond, dubbed "Bangla", was listed on the London Stock Exchange on Monday morning, said the IFC in a press release.
The three-year bond was placed with asset managers dedicated to emerging markets. The deal was arranged by Standard Chartered Bank and Bank of America Merrill Lynch.
Experts are optimistic to see the good start of local currency-denominated fund-raising from the international debt market.
"Bangla Bond has introduced the Bangladeshi currency in the international debt market and it has set a benchmark of expected return from all the taka-denominated bonds which may be offered to the international investors in coming days," said Ershad Hossain, the managing director of City Bank Capital Resources Ltd, who had served in international financial markets for over two decades prior to joining the local investment bank.
The IFC, with its AAA credit rating, offered investors a 6.3 percent interest rate annually for a three-year tenure, according to the press release.
The IFC will use the bond proceeds to finance the Pran Group in order to boost their agro-processing capacities and expand the rural distribution reach.
Based on such a need, the IFC intends to collect more money through extending the Bangla Bond up to $1 billion.
"The Bangla Bond, issued by triple A-rated IFC, will help provide taka-denominated solutions for fast-growing corporates in agro-business and manufacturing and financial services," said Nena Stoiljkovic, IFC vice president for Asia and Pacific.
IFC Vice President and Treasurer John Gandolfo said, "IFC is committed to expanding local currency financing in emerging markets. In Bangladesh, we plan to continue issuing taka bonds to fund local currency transactions."
Bangla Bond paves the way for sovereign bonds
Finance Minister AHM Mustafa Kamal, during the "Ring the bell" ceremony at the London Stock Exchange, welcomed the issuance of the inaugural Bangla Bond, saying "The issuance of the Bangla taka Bond is the beginning of a long journey to our destination."
The finance minister expressed optimism that the taka-denominated bond will help non-resident Bangladeshis channelise their investments into Bangladesh.
The Bangladesh government has been planning to float sovereign bonds in the international debt market to finance its development projects costing billions of dollars.
Prime Minister's Private Sector Industry and Investment Adviser Salman F Rahman and Bangladesh High Commissioner to the UK Saida Muna Tasneem attended the enlistment ceremony.
Bangla Bond receives warm welcome in London
The London Stock Exchange authority welcomed the listing to its main market.
"This landmark bond from the IFC paves the way for the opening of the global Bangla bond market and raises the profile of the Bangladeshi taka internationally," said Nikhil Rathi, the CEO of the London Stock Exchange and also the director of London Stock Exchange Group for International Development.
To explain London's significance as a source of local currency debt, he said, "London Stock Exchange is a leading exchange for local currency issuance, with Masala, Dim Sum and Komodo bonds raising in excess of $23 billion on our markets. We are delighted to welcome the Bangladeshi taka to London and congratulate IFC on their pioneering transaction."
Local exchanges also getting ready to host Bangla bonds
"Foreign investors are knowing the opportunities for higher return in taka-denominated bonds through Bangla Bond and in coming days the local exchanges too can host such bonds aimed at attracting foreigners," said KAM Mazedur Rahman, former managing director of the Dhaka Stock Exchange.
The local bond market has some issues with formation and trading cost, which the market professionals have communicated with the government.
"Resolving those the local debt market can also be a good destination of international funds focused on emerging economies," said Mazedur, who is also a retired banker.