High-level panel formed to assess feasibility of issuing Panda, other foreign currency sovereign bonds
The eight-member committee will recommend the size of future sovereign bond issues, the currencies in which they should be issued and the most suitable international markets.
Highlights:
- Finance ministry forms panel to assess foreign-currency sovereign bond issuance
- Committee to evaluate Panda Bonds, other international bond markets
- Panel will recommend bond size, currency, timing and maturities
- Government seeks to diversify financing sources, deepen capital markets
- Bangladesh cites low debt and zero default history to attract investors
- Regulatory reforms may allow locals to invest in foreign-currency bonds
The finance ministry has formed a high-level committee to assess the feasibility of issuing Bangladesh's sovereign bonds in international markets in various foreign currencies, including China's proposed Panda Bond, as the government seeks to diversify its financing sources and deepen the country's capital market.
The eight-member committee, headed by Tanvir Shahriar Ghani, special assistant to Prime Minister Tarique Rahman on investment and capital markets, will recommend the size of future sovereign bond issues, the currencies in which they should be issued and the most suitable international markets.
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It will also advise on bond maturities, interest rate structures, issuance timing and other financial and technical matters.
Speaking to The Business Standard, Tanvir said, "Bangladesh is planning to issue foreign-currency bonds across multiple international markets to attract global investors and finance government expenditure.
Financing cost is just one element; there are many other variables we will weigh when deciding which bonds to issue, how much to raise, and how the proceeds should be used.
"Our debt-to-GDP ratio remains low, and the country has a flawless track record with no history of debt default. This gives us a strong capacity to issue new bonds. We will thoroughly evaluate all aspects before submitting our final recommendations to the government."
"Bonds issued in the New York market will be denominated in US dollars, while those raised in China will be Panda bonds," Tanvir explained. "Similarly, issuances in Japan or Hong Kong will be denominated in their respective local currencies."
On domestic participation, Tanvir pointed out that existing legal restrictions prevent Bangladeshi citizens from investing in foreign currency-denominated bonds, emphasising the need for regulatory reforms to lift those barriers.
Outlining the vision for the newly formed committee, he noted that the initiative is part of a broader strategy to diversify national financing options. "We will be reviewing all options within the bond space – both domestic and foreign – while keeping in mind the need to expand across both capital markets," Tanvir said.
"Our expectation is that, collectively, with this talented group from the Ministry of Finance, the Economic Relations Division and Bangladesh Bank, we have the expertise to determine the best options for the country," he said.
"Financing cost is just one element; there are many other variables we will weigh when deciding which bonds to issue, how much to raise, and how the proceeds should be used," he explained.
"Ultimately, Bangladesh will establish itself in global capital markets and remain top-of-mind for foreign fixed-income and equity investors. Making Bangladesh commercially attractive is a primary goal of this committee."
Under its mandate, the committee will recommend policies, strategies and action plans to develop, expand and deepen the country's capital market across both bond and equity sectors.
It will assess the feasibility, timing, costs, risks and market conditions for issuing government securities, corporate bonds, sukuk, green bonds and other debt securities.
Alongside its focus on debt, it will also recommend policy measures to deepen the equity market, improve liquidity and expand alternative long-term sources of capital.
Panda Bond proposal
Ahead of Prime Minister Tarique Rahman's visit to China last month, the Chinese government proposed that Bangladesh issue Panda Bonds denominated in Chinese yuan.
A Chinese delegation visited Dhaka before the trip and held meetings with officials from Bangladesh Bank, the ERD and the finance ministry to discuss the proposal.
A joint statement issued during the prime minister's visit said Bangladesh and China had agreed to pursue the introduction of Panda Bonds.
Earlier this month, a meeting of the government's Alternative Financing Committee, chaired by Finance Minister Amir Khosru Mahmud Chowdhury, discussed issuing sovereign bonds in foreign currencies, including Panda Bonds.
At the meeting, Bangladesh Bank Governor Mostaqur Rahman expressed initial support for issuing a $50 million Panda Bond.
However, ERD Secretary Md Shahriar Kader Siddiky noted during the meeting that while China is willing to support a potential Panda Bond issuance, the International Monetary Fund might raise objections.
The meeting later decided to establish a committee to examine the issuance of sovereign bonds in foreign currencies, including Panda Bonds.
Oversight of bond issuance
On Sunday, the Finance Division officially formed the eight-member panel, bringing together representatives from the Finance Division, the ERD, Bangladesh Bank, and the Bangladesh Securities and Exchange Commission, with the flexibility to co-opt external public or private sector experts as needed.
The committee has been tasked with reviewing and recommending the size, currency, maturity, interest rate structure, timing and market selection for sovereign bond issuance, along with other financial and technical matters.
It will also provide guidance and coordination on key issuance documents and processes, including the offering circular, information memorandum, due diligence, credit ratings, roadshows, investor presentations and investor engagement.
The committee will recommend the appointment of bookrunners, lead managers, financial advisers, legal advisers, rating agencies, paying agents, registrars, trustees and other service providers in line with existing laws, regulations and public procurement rules.
It will also monitor post-issuance activities, including settlement, listing, coupon payments, principal repayments, investor relations and other follow-up matters, and submit recommendations where necessary.
Expanding the investor base
The committee will focus on drawing more long-term capital into Bangladesh's debt market, targeting participation from pension funds, insurance firms, mutual funds, and both international and non-resident Bangladeshi (NRB) investors.
Its mandate extends to recommending policies for a more robust domestic market across equities, bonds, sukuk, and other innovative financial instruments, alongside advising the government on broader capital market reforms.
