The government has planned to float $2bn sovereign bonds from next year to collect fund for infrastructures like Padma Bridge, official sources said.
Finance Minister AMA Muhith took the decision at a meeting of non-concessional loan committee last week. He chairs the committee.
Muhith asked Bangladesh Bank Governor Atiur Rahman to prepare for floating the bonds as the country’s foreign exchange reserves have become stronger than any time.
Atiur Rahman, however, preferred floating the bonds when foreign exchange reserves would reach $25bn mark.
Finance Secretary Mahbub Ahmed, however, argued the country has already enough reserves and so there is no need to wait for that mark, officials who attended the meeting said.
“We have foreign exchange reserves of nearly $22bn which is adequate to pay the import bills for seven months. So why shall we wait longer?” Mahbub was quoted to have told the meeting.
Meanwhile, the reserves rose to record high of $22.3bn at the end of October from $21.8bn a month ago, boosted by defiant exports and remittances.
The US-based investment bank Goldman Sachs and German Deutsche Bank AG have offered Bangladesh’s government to raise up to $3bn fund from international bond market by issuing sovereign bonds for the nation’s different infrastructure projects.
After a meeting with the finance minister last August, a visiting team, headed by managing director of Goldman Sachs, UK, Ryad Yousuf offered the government to raise $2-$3bn from international bond market by issuing sovereign bonds for infrastructure projects.
During a meeting with the finance secretary in September this year, head of fixed income capital markets for Asia of Deutsche Bank, Herman Bake also offered Bangladesh to raise $1bn by floating sovereign bonds.
The officials assured finance minister of raising $2-$3bn in just three months.
Bangladesh is one of the “Next 11” countries identified by Goldman Sachs in 2005 as a fast growing economy.
After the meeting, AMA Muhith said the interest rate of the bond will be at least 7% with a minimum maturity period of five years.
He, however, said there was a scope for bargaining on maturity period.
In 2011 the government took a move to issue sovereign bonds to raise $500m from the international market to implement development projects because of poor availability of soft loans from the donors.
But it abandoned the plan after a committee, led by Bangladesh Bank Deputy Governor SK Sur Chowdhury, identified risks including appreciation of local currency against dollar and fall in soft loans from donor agencies in last year.
World Bank, Asian Development Bank and Japan International Cooperation Agency suspended around $2bn loans to Padma Bridge project in 2012 following corruption allegations in tender process.
Sources said the government’s decision to build Padma Bridge with own fund has revived the abandoned plan of sovereign bonds.