Standard Chartered Bangladesh has received all the regulatory approvals for issuing Tk850 crore zero-coupon bond, and the bank is going to begin subscription this month.
"We are going to open the private placement of the bond this month and the subscription in phases," Standard Chartered Bangladesh CEO Naser Ezaz Bijoy said.
This will be the first zero-coupon bond issued by a bank in Bangladesh.
"As the only multinational universal bank in Bangladesh, we are in a unique position of channelling capital where it matters the most. As a trusted and reliable issuer with a 'AAA' credit rating for over a decade, we believe our offering will support the development of Bangladesh's capital market while offering depositors a new avenue to invest in a product that offers tax-adjusted returns," Naser said.
With this offering, Standard Chartered is leveraging strong investor confidence in its strategy and outlook – and the quality of its financial position – to increase liquidity, the bank said in a statement on Saturday.
The funds raised will support the bank's overarching mission of being a partner in progress to the nation, the statement added.
Thanking the securities regulator and its chairman, Naser said: "Their commitment towards the development of the bond market will play an important role in mobilising long-term financing for the sustainable growth of the economy."
Professor Shibli Rubayat-Ul-Islam, chairman of the Bangladesh Securities and Exchange Commission (BSEC) said the BSEC – in collaboration with the ecosystem of regulators and stakeholders – is working towards the development of the country's capital markets – particularly debt market – which will be vital for financing long-term needs of industries and infrastructure.
"We hope Standard Chartered's issue will encourage greater participation of our leading corporates, state-owned enterprises, and municipalities in the debt capital, devising optimal financing strategies which will help them grow and prosper sustainably."
"Standard Chartered's initiative of issuing its first corporate bond is commendable and will contribute towards setting the right direction for capital markets," Professor Shibli said.
The bank's issue is a non-convertible, unsecured, fully redeemable, zero-coupon bond.
The maturity period for the product will be five years from the date of issue.
Instead of paying interest from time to time, zero-coupon bonds are issued at a discount and investors get the principal back in maturity.
Bangladesh does not tax gains from zero-coupon bonds until the investor is a bank or financial institution.
Standard Chartered bond will be offered at a discount rate of 4-5%, according to a recent BSEC statement.
Green Delta Insurance Company Limited will act as the trustee for this issue, while the bank itself will work as the lead arranger.
Standard Chartered is leading the debt capital market in Bangladesh and also an acknowledged global leader in Asia, Africa and the Middle East.
Since pioneering in 1997, the capital markets unit of Standard Chartered has arranged over $7.50 billion equivalent local and foreign currency in power, telecommunication, infrastructure, food and beverage, textile, service, renewable energy and other key sectors.
The bank operates one of the country's most sophisticated dealing rooms with a diverse range of risk management products, pioneering several financial firsts – including FX option in 2006, commodity derivative in 2008, interest rate derivative in 2009, and zero-coupon Islamic Certificate Issuance in 2019.
The leading international banking group, with a presence in 59 of the world's most dynamic markets, is serving clients in a further 85.
Standard Chartered PLC is listed on the London and Hong Kong stock exchanges and also on the Bombay and National stock exchanges of India.