ADB seeks final nod for floating offshore taka bond, Dhaka not in a hurry

FE REPORT | Saturday, 12 June 2021

The Asian Development Bank (ADB) has sought final approval from the government for floating offshore taka-denominated bond for Bangladesh, officials said.

It has also forwarded a sample approval letter to the economic relations division (ERD) for consideration.

The approval, however, may not come soon as the government, apparently, is not in a hurry.

"…We respectfully request the government to provide the approval sought to proceed with the issuance of offshore taka-linked bond," reads a recent letter signed by ADB country director Manmohan Parkash.

In December 2019, the ADB first expressed interest to issue both onshore and offshore taka bonds in and outside Bangladesh in a letter to the government.

Before that, an ADB delegation, led by Mr Parkash, met finance minister AHM Mustafa Kamal at his secretariat office in late November and discussed the matter.

The issuance of taka bond in international market would help lessen pressure on the banking sector as an alternative source to fund development work, they argued.

The delegates also discussed that the issuance of the bond would further help come out of the culture of granting long-term loans by taking short-term deposits.

The government responded positively to the multilateral lender's proposal and the central bank sent some queries to it regarding the bond issuance.

In late May, the ADB in a letter duly replied and addressed relevant comments in a comparative statement to take forward the venture and issue the bond.

The bank said it would seek approval for onshore taka bond at a later stage after completion of necessary discussion.

Contacted on Friday, ERD additional secretary Dr Pear Mohammad, however, said the issuance of the bond has yet to reach the final stage.

"It will take time," he told the FE without elaborating.

On November 11, 2019, Bangladesh's first offshore taka bond namely 'Bangla Bond' was listed on the London Stock Exchange.

The International Finance Corporation (IFC) launched bond worth the Tk 800-million ($9.5 million) to expand operations and distribution facilities for Bangladesh's PRAN Group.

The three-year bond was oversubscribed by 30 per cent higher than the offer of the IFC, a member of the World Bank Group.

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