Government plans raising Tk 50b with Sukuk to supplement bonds

Hefty interest payments on growing debts prompt the government to go for fundraising with Sukuk worth Tk 50 billion to supplement traditional bonds that are getting costlier by the day for high yields. Interest rates on conventional bonds have gone high amid growing government borrowing with this sort of alternation instruments with dependence on bank borrowings lessened. As such, the government now plans to borrow higher amounts of money by issuing an Islamic bond nicknamed Sukuk to cut down interest spending. The ministry of finance (MoF) now plans to take up to Tk 50 billion from Sukuk bond in the new fiscal year though the budget has set a target of obtaining Tk 20 billion from this source. The government has gone for issuing Sukuk bonds since December 2020 in line with the Bangladesh Government Investment Sukuk Guidelines 2020. So far, some Tk 190 billion worth of Sukuk bonds have been issued under four projects, finance ministry data show. The first Sukuk bond was issued on December 28, 2020 to raise funds for implementing a safe-water-supply project. A number of private-sector conglomerates, including Beximco Group and Pran-RFL, also raised funds through issuing Sukuk.

Source: https://today.thefinancialexpress.com.bd/first-page/govt-plans-raising-tk-50b-with-sukuk-to-supplement-bonds-1720463053

Outflow of overseas funds continues as asset value erodes

Foreign stakes in leading companies have continued falling as overseas investors have dumped their holdings since the removal of floor price in January mainly due to the sharp devaluation of the local currency against the dollar. The country’s net foreign portfolio investment stood at $89 million in the negative for the nine months through March this year, compared to $45 million in the negative for the same period a year ago, according to Bangladesh Bank data. Foreign investors witnessed a decline in value of their assets when the taka became cheaper. The forecast that the local currency would lose its value further prompted them to exit the market. For example, if a foreign investor invested $1 or Tk 90 in a stock two years back, he/she has already seen a 30 per cent reduction in the value of the asset since the exchange rate has risen to Tk 117. The taka has lost its value by more than 38 per cent against the dollar since the start of the Russia-Ukraine war in February 2022. Forex reserves almost halved during the time. The 18-month-long floor-price trap is another major driver of the decline in foreign stakes in local companies. The absence of price discovery of a large number of stocks for so long acted as a catalyst for the quick outflow of overseas funds. The prime index hovered around 6,300 points for nearly one and a half years until January this year, thanks to the securities regulator’s bar on trade in shares at prices lower than the floor price set for every stock.

Source: https://today.thefinancialexpress.com.bd/stock-corporate/outflow-of-overseas-funds-continues-as-asset-value-erodes-1720462031

Defaulters allowed 3-year exit facility with 10% down payment

For the first time, the Bangladesh Bank has introduced an exit policy allowing defaulted borrowers up to three years for loan repayment with a 10% down payment, aimed at maintaining liquidity flow and reducing toxic loans in the banking sector. The exit facility will not be considered debt rescheduling or restructuring, and borrowers will be ineligible for any new credit until the existing loan is fully repaid, according to a central bank circular issued today. Banks will determine the loan instalment period, allowing borrowers to clear the dues through multiple payments within three years, the money market regulator stated in the circular, directing managing directors of banks to implement the policy. In the absence of a policy, banks used to follow different criteria for the exit mechanism for the collection and adjustment of loans, according to central bank officials. Banks will settle applications within 60 days after receiving them from borrowers. The exit facility must be approved by the board of directors of each bank, although bank management will have the authority to grant the exit facility for loans up to Tk10 lakh. According to data from the Bangladesh Bank, as of the end of March 2024, the total amount of disbursed loans in the banking sector stood at nearly Tk16.41 lakh crore. Out of this, over Tk1.82 lakh crore had become defaulted, which is 11.11% of the total disbursed loans.

Source: https://www.tbsnews.net/economy/banking/exit-policy-go-debt-free-defaulters-can-repay-loans-within-3yrs-10-down-payment

Wheat imports from war-torn Russia, Ukraine at 5-year high

Bangladesh has managed to restore the majority of its wheat procurement from two reliable global sources, Russia and Ukraine, despite the countries being at war. The wheat imports became even more critical because India, an important wheat source, banned exports after the war had begun, and the ban is still in place. The grain’s total import now stands at a five-year peak in the fiscal 2023-24. According to the Ministry of Food, wheat imports in FY24 exceeded 68 lakh tonnes, with around 50% shipped from Russia through both government procurement and private imports. Of the government’s 10 lakh tonnes of imports, 8.5 lakh tonnes originated from Russia, with the remainder sourced from Ukraine, Romania, Bulgaria, and Uruguay. In FY21, the two warring nations accounted for 38% of Bangladesh’s wheat imports, while 24% came from India.

Source: https://www.tbsnews.net/bangladesh/wheat-imports-war-torn-russia-ukraine-5-year-high-895201

BRAC Bank launches ‘China Desk’

BRAC Bank has formalised a partnership agreement with the Chinese Enterprise Association in Bangladesh (CEAB) to enhance service offerings for CEAB members. This strategic collaboration will allow CEAB members to access BRAC Bank’s products and services at preferential rates. As part of this initiative, BRAC Bank has established a dedicated ‘China Desk’ within its Corporate Banking Division. It is staffed with Mandarin-speaking professionals to provide tailored support to the Chinese business community. With 280 large and medium-sized Chinese enterprises under its umbrella, CEAB has successfully constructed vital infrastructure projects such as highways, bridges, railways, and power facilities in Bangladesh. BRAC Bank’s Corporate Banking Division has developed industry-specific solutions to meet the unique needs of various sectors. This partnership with CEAB signifies BRAC Bank’s ongoing commitment to expanding its business with Chinese investors and companies in Bangladesh.

Source: https://today.thefinancialexpress.com.bd/trade-market/brac-bank-launches-china-desk-1720461301