Dhaka:The Bangladesh Securities and Exchange Commission (BSEC) has approved bonds worth Tk 3,500 crore over the last five months to create new investment opportunities and expand long-term financing options through the capital market.
According to Bangladesh Sangbad Sangstha, the approvals, granted since the current commission leadership assumed office, aim to strengthen corporate financing through the capital market and offer investors alternative investment opportunities beyond equities.
The approved bonds include a three-year zero-coupon green bond worth Tk 1,000 crore issued by BRAC Bank, a seven-year subordinated bond worth Tk 800 crore issued by Southeast Bank, a seven-year sustainable subordinated bond worth Tk 800 crore issued by Bank Asia, a seven-year subordinated bond worth Tk 500 crore issued by Al-Arafah Islami Bank, and a subordinated bond worth Tk 400 crore issued by ONE Bank.
In addition to approving the bonds, the commission has undertaken 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 bond issuance regulations.
Part of these reforms involves making listing on the main boards of stock exchanges a condition for the approved bonds. This move aims to increase corporate bond trading and activate the secondary market. The commission has also directed stock exchanges to reduce bond listing fees and taken initiatives to simplify and modernise the issuance process to attract more institutional investors.
BSEC Executive Director and Spokesperson Md Abul Kalam stated that the commission had, for the first time, imposed the condition of main-board listing to make the bond market more dynamic. The bonds will have opportunities for trading on the secondary market through stock exchanges, allowing investors to sell them when necessary and exit their investments more easily, thus helping establish an effective bond market and increase trading.
Moreover, the BSEC is working to introduce new investment products to diversify the capital market. It has taken initiatives to launch thematic and social bonds targeting specific objectives, such as environmental protection, social development, and women's empowerment. An Orange Bond worth Tk 158 crore issued by Sajeda Foundation has been approved to finance women's empowerment and social development activities.
The commission is also taking steps to engage major institutional funds in the corporate bond market. A significant portion of funds held by various provident and gratuity funds currently goes into government treasury bills and bonds. A new policy framework is being developed to allow these funds to be invested in corporate bonds and equities, creating a new source of long-term financing for the capital market.
The BSEC is prioritising greater participation by insurance companies and mutual funds in the bond market. It is working to create a favourable environment for fixed-income mutual funds and insurance companies to increase their investments in corporate bonds.
Furthermore, the BSEC plans to make a dedicated bond trading platform more effective to facilitate bond transactions and expand secondary-market trading opportunities for investors. To simplify bond issuance and align the process with current market needs, the commission is working to modernise the existing legal framework, initiating revisions to the Debt Securities Rules to make bond approval and issuance more efficient while strengthening investor protection and ensuring transparency.
The commission believes that Bangladesh's capital market should evolve beyond its dependence on equities and become a diversified market comprising shares, bonds, and other financial instruments. Developing the corporate bond market has become an important component of its reform programme, and successful implementation of these initiatives could improve long-term financing opportunities for private-sector companies and enable investors to choose relatively stable, fixed-income investment products alongside equities. An active secondary bond market could also increase trading activity and deepen the country's capital market.