Bond investors’ return would be measured based on the floating rate
The securities regulator has approved Social Islami Bank Ltd to issue a Shariah-compliant perpetual bond worth Tk500 crore.
The shariah-based listed commercial bank would strengthen its Tier-1 capital base with the collected money, informed the Bangladesh Securities and Exchange Commission (BSEC).
The regulator, after its 750th commission meeting on Wednesday, said the Social Islami Bank Bond will be an unsecured contingent-convertible bond. It means its units can be converted into the issuer's equity in certain cases of undercapitalisation.
Bond investors' return would be measured based on the floating rate.
Local Institutional investors and high net worth individuals can buy the bond units through a private placement.
Local merchant bank EBL Investments Ltd will act as the trustee of the bond while two other investment banks, City Bank Capital Resources and Prime Bank Investment Limited, are mandated as its lead arrangers.
Banks in Bangladesh are opting for perpetual bonds this year to fulfil their Tier-1 capital requirement.
They had come through a decade with issuance of tenured subordinated bonds for strengthening Tier-2 capital base, as required by the standard.
The banks have a deadline to comply with Tier-1 strengthening regulations.
According to local rating agency Emerging Credit Rating Ltd, Social Islami Bank's long-term credit rating is "AA" and short-term rating is "ST-2".
The rating was announced in the middle of this year.