UCB, Trust Bank allowed to issue bonds worth Tk1,400cr

The Bangladesh Securities and Exchange Commission (BSEC) has allowed the United Commercial Bank (UCB), and Trust Bank to issue subordinated bonds worth Tk1,400 crore in total.

Of this, the UCB will issue a Tk1,000 crore bond, and the Trust Bank Tk400 crore.

The commission approved the bond issuance of the two banks on Wednesday in a meeting, said a press statement.

United Commercial Bank

The bank's bond will be an unsecured, non-convertible, and fully redeemable one which will help fulfill the bank's Basel II requirements.

UCB will use the bond proceeds to increase its capital base.

The bond's tenure will be seven years, coupon rate 6% to 9%, and its face value per unit will be Tk1 crore.

The bond will be issued through private placement to financial institutions, insurance companies, institutional investors, cooperative banks, and other eligible investors, and will be included in the alternative trading board with conditions.

DBH Finance Corporation Ltd will be the trustee of the UCB's Tk1,000 crore bond.

Trust bank

The Trust Bank's bond will also be an unsecured, and non-convertible one which will help the bank fulfill its Basel II requirements.

The Tk400 crore bond proceeds would be regarded as Additional Tier 1 capital of the issuer.

This bond's coupon rate will also be 6% to 9%, and its face value per unit will also be Tk1 crore.

It will be issued through private placement to institutional investors and other eligible investors, and will be included in the alternative trading board with conditions.

DBH Finance Corporation will be this bond's trustee as well, while Standard Chartered Bank will be the arranger.

Currently, the local bond market is dominated by subordinated bonds mainly issued by banks. These help lenders construct their mandatory Tier-2 Capital base through the bond proceeds within a specific tenure.