Dhaka, Bangladesh (BBN) - The Asian Development Bank (ADB) has sought the government’s approval to issue local currency bonds aiming to facilitate Bangladesh’s development, officials said.
The Manila-based lender plans to introduce the bond within the domestic market first and, upon its success, extend the initiative to overseas investors, they explained.
ADB recently submitted its bond issuance proposal to the Economic Relations Division (ERD) under the Ministry of Finance for approval. Following this, the government sought opinions from various stakeholders on the matter.
“We’ve already sought opinions from relevant ministries and agencies in this connection,” an ERD senior official said, adding that if they find it viable for the country, only then will be approved it.
However, the proposal has been circulated among the Finance Division, Bangladesh Securities and Exchange Commission (BSEC), National Board of Revenue (NBR), Bangladesh Bank, and the Financial Institutions Division for their feedback.
ADB aims to issue taka-denominated bonds in the local market initially and, based on the outcome, scale it up domestically and internationally.
Given Bangladesh’s growing financing needs for infrastructure and expanding private sector, the initiative would help mobilize funds to support both public and private sector development, an ADB official explained.
On the other hand, another ERD official recalled that Bangladesh had earlier approved a similar initiative by the International Finance Corporation (IFC), which issued taka-denominated bonds in the London market. “That experience was not very successful, so we are being cautious this time,” he noted.
In November 2019, IFC launched its first Bangladeshi taka-denominated “Bangla Bond” worth BDT 800 million (around US$9.50 million at the time) on the London Stock Exchange. The proceeds financed the PRAN Group for business expansion and job creation.
Later, in July 2022, IFC invested up to US$50 million (around BDT 4.70 billion) in Bangladesh’s first domestic housing bond, issued by BRAC Bank, to support affordable housing for low- and middle-income groups and strengthen the local long-term bond market.
The ERD officials also said ADB’s new proposal mirrors IFC’s approach, aiming to boost local currency financing in Bangladesh and support industrial and business growth.
This initiative seeks to raise funds domestically and reduce the private sector’s reliance on traditional bank loans, they added.
BBN/SSR/AD