- Already approved perpetual bonds must follow direct listing
- Upcoming ones to float 10% units in public offer
- Intermediaries and mutual funds must invest 3% of their own portfolio assets in listed debt securities
Issuers of perpetual bonds must float 10% of the bond units through public offer, according to the Bangladesh Securities and Exchange Commission (BSEC).
The 11 commercial banks that have already approved to collect capital through issuing perpetual bonds will have to list the bonds in the bourses under the direct listing method, the BSEC said after its 774th commission meeting on Thursday.
The commission meeting, presided by BSEC Chairman Professor Shibli Rubayat-Ul-Islam, also decided that market intermediary firms - stock dealers, merchant banks and asset management companies - must put 3% of their own investment portfolio assets into listed debt securities by 30 June, 2022.
The mutual funds will also have to maintain a 3% exposure in listed-debt securities, and the trusty of the funds will be responsible to ensure the mandatory investment for the sake of the development of the corporate bond market in Bangladesh that will enable local bourses to cater to long term financing needs of corporates.
The Bangladesh capital market has long been lacking sufficient listed debt securities and that has created a hurdle for investors to diversify their portfolios, while companies have also been deprived of ample opportunities to collect debts from bonds.
Corporate bonds had virtually been limited within types of redeemable subordinated bonds mainly by commercial banks as they were in need of strengthening their Tier-ii capital base required by the banking regulator.
Also, the inconvenient cost structure for bond issuance had been deterring corporates to issue bonds until last year when the government rationalised many costs of bond issuance.
In the last one year, the cost of secondary trading of bond units has also been rationalised and bonds are expected to take off in the coming days.
The BSEC has approved 11 commercial banks to issue perpetual bonds, which have no tenure so that they can strengthen their additional Tier-i capital.
Now, corporates, NGOs and local government entities prefer bonds to finance their activities.
The government and the market regulator are also paving the way for asset-backed securities, especially Shariah-compliant ones to finance development projects.
Besides, capital market and money market regulators are working together for exchange trading of treasury bills and bonds that may take the capital market to a different height through attracting both local and foreign investors.