Non-banking financial institution Bangladesh Finance and Investment Company Limited (BD Finance) has decided to issue a zero-coupon bond worth Tk200 crore, aiming at business expansion and diversification of funding sources.
The nature of the bond is unsecured zero-coupon, fully redeemable and non-convertible, stated the company's disclosure on the Dhaka Stock Exchange (DSE) website on Monday.
The tenure of the bond is three years with a yearly discount rate of 7%-7.50%. Its face value is Tk10 lakh per unit.
The issuance of the bond is also subject to the approval of the regulatory authorities – the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC).
A zero-coupon bond is simply a discount bond which is originally sold at a discount from its face value instead of periodic dividend payments or interests. Face value is the amount paid to the bondholders at maturity.
City Bank Capital Resources Ltd is a lead arranger and Sandhani Life Insurance Company is the trustee of the bond.
Meanwhile, BD Finance's consolidated net profit rose by 629% to Tk17.26 crore and earnings per share was Tk1.02 in the first three quarters of this year.
A company official said this growth in the company's profit is attributable to a vibrant capital market.
The company did not have to take provisions on unclassified investments as per the central bank's directive, which also contributed to the high growth in profit, he added.
In the May-September period, DSEX – the prime index of the DSE – leaped by 24% to 4,963 points.
Following this growth, the company earned Tk5.96 crore from the capital market. In the same period during the previous year, the company lost Tk19.90 crore.
However, interest income of the company fell by 11% to Tk126.54 crore in the first three quarters of this year.
Meanwhile, it paid 12% cash dividends to its shareholders for the 2019 financial year.
In the 2018 financial year, the company paid a 10% stock dividend to its shareholders.
The company got listed on the DSE in 2007 and its current paid-up capital is Tk1,167.53 crore.
The closing price of the company's share at the DSE was Tk20.80 each on Monday.
At the end of October this year, sponsors and directors jointly held 30.32% of shares of the company, while institutional investors and general investors owned 13.92% and 55.76%, respectively.