The International Finance Corporation (IFC), a member of the World Bank Group, has issued its inaugural bond in Bangladeshi taka (BDT), raising 800 million BDT (US$9.5 million) to expand operations and distribution for PRAN Group, one of Bangladesh’s largest processed food and beverage manufacturers, and a major private sector employer in the country. This is the first-ever Bangladeshi taka-denominated transaction issued in the international markets.
Announced on November 11, the bond, dubbed Bangla, has just been listed on the London Stock Exchange (LSE). The three-year bond, arranged by Standard Chartered and Bank of America Merrill Lynch, was placed with asset managers dedicated to emerging markets. The proceeds of the bonds will be used to provide financing to the PRAN Group to boost their processing capacities and deepen the rural distribution reach.
Bangladesh Finance Minister AHM Mustafa Kamal, welcomes the issuance of the inaugural Bangla bond, saying “the issuance is the beginning of a long journey to our destination.”
LSE CEO and director of international development for LSE Group Nikhil Rathi says the landmark deal will pave the way for the opening of the global Bangla bond market and raises the profile of the Bangladeshi taka internationally. He notes that London is a leading exchange for local currency issuance, with Masala, Dim Sum and Komodo bonds raising in excess of US$23 billion on its markets.
IFC vice-president for Asia-Pacific Nena Stoiljkovic says the Bangla bond will help provide taka-denominated solutions for fast-growing corporates in agribusiness, manufacturing and financial services.
IFC vice-president and treasurer John Gandolfo highlights IFC’s commitment to expanding local currency financing in emerging markets. “In Bangladesh, we plan to continue issuing taka bonds to fund local currency transactions,” he adds.
IFC issues local currency-denominated bonds in emerging market currencies as part of its regular programme of raising funds for private sector and domestic capital markets development. In many cases, IFC is the first, or among the first, non-resident issuers in local currency both in domestic and international markets. IFC bonds are rated AAA by Moody’s Investors Service and Standard & Poor’s.
Since the inception of the local currency lending programme in the early 2000s, IFC has extended more than US$16 billionin financing to its clients globally, in more than 50 currencies,including the Indian rupee, Chinese renminbi, Brazilian real, South African rand, Turkish lira, Kazakh tenge, Sri Lankan rupee, Cambodian riel, Myanmar kyat and Russian ruble.
In May this year, IFC announced the issuance of the inaugural offshore Khmer riel (KHR) bond, supporting the creation of capital markets for Cambodia and the expansion of local currency lending to micro and small businesses, including farmers and women entrepreneurs.
The US$12 million (KHR48.6 billion) proceeds of the bond will be used to replace a portion of the local currency funding for the first KHR bond issued in the country by Cambodian microfinance institution Hattha Kaksekar Limited (HKL), in which IFC invested in late 2018.