Written by The Banking Post
The market regulator has approved two zero-coupon bonds, signalling a growing shift by corporates towards alternative funding sources as bank financing tightens.
The Bangladesh Securities and Exchange Commission gave the green light to City Sugar Industries Ltd to raise Tk 13 billion through a three-year bond. The instrument will be fully secured, non-convertible and issued at a discount rate of around 13.50 per cent.
The funds will be used to repay high-cost bank loans, helping the company ease its debt burden. The bond, with a unit value of Tk 1.3 million, will be placed privately among institutional and high-net-worth investors and listed on the Alternative Trading Board.
In a landmark move, the regulator also approved a proposal by SAJIDA Foundation to issue the country’s first “Orange” zero-coupon bond, aiming to raise over Tk 1.58 billion.
The unsecured bond will carry a discount rate between 7.0 per cent and 11.50 per cent, with maturities ranging from one to three years. Proceeds will be channelled into expanding microfinance operations, particularly targeting financial inclusion and women’s empowerment.
Market insiders say such instruments are gaining traction as companies look to diversify funding amid liquidity constraints and relatively high borrowing costs.
Unlike conventional bonds, zero-coupon bonds do not pay periodic interest. Instead, they are issued at a discount and redeemed at face value on maturity—allowing issuers to defer cash outflows while offering investors a fixed return.
