The Bangladesh Securities and Exchange Commission (BSEC) has approved bonds worth Tk 3,500 crore over the past five months to create new investment opportunities in the capital market and expand access to long-term financing.
Since the commission’s current leadership took charge, the approvals have been aimed at increasing corporate financing through the capital market while creating alternative investment opportunities beyond the stock market.
The approved bonds include a three-year, Tk 1,000 crore zero-coupon green bond issued by BRAC Bank; a seven-year, Tk 800 crore subordinated bond from Southeast Bank; a seven-year, Tk 800 crore sustainable subordinated bond from Bank Asia; a seven-year, Tk 500 crore subordinated bond from Al-Arafah Islami Bank; and a Tk 400 crore subordinated bond from ONE Bank.
Alongside the approvals, the BSEC has introduced several reform initiatives to expand the bond market. These include listing bonds on the main boards of stock exchanges, introducing thematic and social bonds, increasing participation by provident and pension funds, encouraging investment by insurance companies and mutual funds, and modernising regulations governing bond issuance.
As part of the reforms, issuers have been required to list the approved bonds on the main boards of stock exchanges. The move is intended to increase corporate bond trading and activate the secondary market. The commission has also taken steps to simplify and modernise the bond issuance process to encourage institutional investment and has directed that bond listing fees be reduced.
BSEC Executive Director and spokesperson Md Abul Kalam told the state-run Bangladesh Sangbad Sangstha (BSS) that the commission had, for the first time, made main-board listing a condition for bond approvals to revitalise the market.
As a result, the bonds will have the opportunity to be traded on the secondary market of stock exchanges. The commission has also instructed exchanges to reduce listing fees, he said.
Kalam said main-board listing would allow investors to sell their bonds when necessary and exit their investments more easily. This would help establish an effective bond market and increase trading activity.
The BSEC is also working to introduce new investment products to the capital market. It has taken initiatives to launch thematic and social bonds targeting specific objectives, including environmental protection, social development and women’s empowerment.
As part of this effort, the commission has approved a Tk 158 crore Orange Bond issued by Sajeda Foundation to finance women’s empowerment. The bond is expected to support women’s empowerment and social development initiatives while introducing a new investment product to the market.
BRAC Bank’s green bond, meanwhile, is planned to finance environmental and social development initiatives and help raise Tier 2 capital. These initiatives could broaden the range of corporate bonds and the sectors available for investment.
BSEC spokesperson Abul Kalam said the commission was working to bring major institutional funds into the corporate bond market.
A substantial portion of the money held in various provident and gratuity funds is currently invested in government bills and bonds. The commission is working on a new policy framework to allow a certain portion of these funds to be invested in corporate bonds and shares, he said.
If implemented, the initiative would create a new source of long-term capital for the capital market, increase demand for corporate bonds and expand alternative financing opportunities for the private sector, Kalam added.
The commission is also prioritising greater participation by insurance companies and mutual funds in the bond market. It is working to create conditions that would enable fixed-income mutual funds and insurance funds to invest more in corporate bonds.
In addition, the BSEC plans to make a separate trading platform for bond transactions more effective. The initiative is expected to broaden investors’ opportunities to buy and sell bonds and facilitate greater activity in the secondary market.
The commission is also working to modernise the existing legal framework to make bond issuance simpler and more timely. Amendments and reforms to the Debt Issue Rules are underway, with the proposed regulations intended to make bond approval and issuance more efficient while strengthening investor protection and transparency.
The BSEC believes the capital market should develop beyond its reliance on shares and become a diversified market comprising stocks, bonds and other financial products. The development of the corporate bond market is therefore being treated as a key part of its reform programme.
If the initiatives are implemented, private companies will have greater access to long-term financing, while investors will be able to choose relatively stable, fixed-income products alongside shares. A more active secondary bond market could also expand trading and deepen the overall capital market.
