IFC Looking to Launch First Ever Offshore Taka Bond Program, Strengthening Bangladesh’s Capital Markets

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The FINANCIAL — IFC, a member of the World Bank Group, announced on October 11 that it has received an approval from Bangladesh’s Ministry of Finance for the first ever offshore Taka bond program. The $1 billion-equivalent bond program aims to strengthen capital markets and increase foreign investment in Bangladesh. 

Under the program, IFC will issue the first Taka-linked bonds in the offshore market and bring the proceeds back to finance investment in Bangladesh. The bonds will be listed on the London Stock Exchange, according to IFC.

“Domestic capital markets are critical to providing long-term, local-currency finance for the private sector—which plays an essential role in job creation in emerging markets,” said Jin-Yong Cai, IFC’s Executive Vice President & CEO. “IFC’s offshore bond program will help bring depth and diversity to Bangladesh’s capital markets and create an alternative source of funding for Bangladeshi companies.” 

IFC’s work in Bangladesh supports the World Bank Group’s goals of ending extreme poverty and boosting shared prosperity. As of June 30, 2015, IFC’s investment portfolio in Bangladesh for its own account and that of participants was nearly $800 million.  IFC has built a strong pipeline of private sector projects in key industries such as sustainable energy, power generation and banking. 

Bangladesh has maintained a solid growth track record. In the past decade, the economy has grown at over 6 percent per year. The offshore Taka bond will enable more foreign investors to participate in the Bangladesh growth story”, said Mr. Abul Maal A. Muhith, Bangladesh’s Minister of Finance, “We look forward to working with IFC to attract yet untapped foreign capital through off-shore taka market in order to meet our long-term development funding needs.

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This program follows IFC’s ground-breaking Masala bond program launched in 2013. To date, IFC has sold Indian Rupee 106 billion (or $1.7 billion) bonds to international investors. The bonds range in tenor from three to ten years and created an international triple-A yield curve for the offshore Rupee markets. The Reserve Bank of India has now allowed Indian companies to issue offshore Rupee bonds, expanding access to international capital markets for local firms. 

IFC has, over the years, launched various bond programs with the aim to strengthen local capital markets and to finance projects in emerging markets. So far, IFC has issued bonds in 17 local emerging market currencies such as Armenian Dram, Chinese Renminbi, Indian Rupee, Peruvian Soles and Zambian Kwacha. 

 

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