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ICB gets nod to raise $300m via bonds

25 September 2021

Kazi Zahidul Hasan  :
Investment Corporation of Bangladesh (ICB) has received consent from the Financial Institutions Division (FID) to raise $300 million funds through auction of dollar bonds from the international market.
The FID, under the Ministry of Finance, gave its nod in this regard on Tuesday.
ICB earlier sought the FID's permission regarding raising foreign funds to strengthen its capital base as well as pay off expensive loans.
Officials said the five-year dollar denominated bonds of $300 million at a coupon rate of 3.5 per cent would help the corporation to mobilise low cost funds from overseas market.
The state-owned corporation is now heavily dependent on high cost borrowing from domestic sources.
"We have permitted ICB to issue foreign bonds to support its effort to raise funds from the international market," a senior FID official told The New Nation yesterday on condition of anonymity.
He said the 50 per cent of the funds are raised from the proceeds and it would have to be invested in the capital market.  
Besides, ICB has been asked to use hedging instrument to reduce risks related to foreign exchange rate in the fund raising process.  
The FID official, also said, the government will not provide any guarantee in any condition in the aforesaid bonds.
Abul Hossain, Managing Director of ICB, could not be reached for comment as he was on an official tour abroad.    
"The funds to be raised from issuing bonds will be utilised for ICB's onward investment in the capital market and repaying loans which it took by accepting high cost deposits mainly from various government institutions and entities," an ICB official told The New Nation on
 Friday on condition of anonymity.
He said the government institutions had earlier parked their deposits with the ICB at 11-12 per cent interest rates. But the interest rates of the bonds are significantly lower compared to borrowing through interest bearing deposits.
Earlier, some local and foreign companies did show interest to work as arrangers of the fund to be issued by the ICB through overseas bonds.
A Swiss investment bank already expressed its interest to invest in the planned bond against which ICB would pay comparatively low interests in line with the international markets.
ICB is mainly an investment bank which was established on 1 October 1976. It is one of the largest investors in share market of Bangladesh. Investing in share market, providing loans and advances, acting as manager/trustee/custodian of mutual funds are some of main activities of ICB.

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