Business Report :
IFIC Bank has decided to issue a zero-coupon bond to collect Tk600 crore to meet the Tier II capital requirement as per BASEL III guidelines.
In a stock exchange disclosure on Thursday, the lender said the zero-coupon bond will be fully redeemable, non-convertible, and unsecured.
With this move, the lender has backtracked on its August 2022 decision to issue a non-convertible coupon-bearing subordinated bond of Tk500 crore.
The private sector lender is a guarantor of ‘IFIC Amar Bond,’ which raised Tk1,000 crore for Sreepur Township.
The bank’s latest shift has been prompted by the requirement that 50% of the bond issuance had to be distributed to entities other than banks and financial institutions, according to the bank’s officials.
Given that the unit value of the bond was set at Tk1 crore, it was impractical for anyone other than banks and financial institutions to purchase it, they added.
As a result, the bank revised its decision and opted to issue zero-coupon bonds to retail customers instead, making it more accessible to a broader audience. The discount rate of the zero-coupon bond will be 15.46% per annum, and the lot value will be Tk50,000.
It will have multiple maturities, meaning investors will get back their money in tranches starting from the first year.