BSEC Frames Rules for Mandatory Trading of Banks’ Perpetual Bonds

Source: Regulation Asia Duruthu E Chandrasekera, Regulation Asia 2020-07-17

Two banks have received conditional approval to list perpetual bonds on Bangladesh’s stock exchanges, while BSEC works to frame its rules for the listings.

The BSEC (Bangladesh Securities and Exchange Commission) has given conditional approval to two banks to list perpetual bonds on the main boards of the two stock exchanges in the country.

Newly-appointed BSEC Chairman Shibli Rubayat Ul Islam said the regulator has granted in-principle approval to ONE Bank and Mutual Trust Bank to float non-convertible perpetual bonds worth BDT 4 billion each as tradable securities.

The perpetual bond issuances will all be floating rate, unsecured, non-convertible, and Basel III compliant, with a face value of BDT 1 million and coupon rates between 11-14 percent.

“We will accept their applications after we frame necessary rules for listing of the banks’ perpetual bonds. We are readying the rules,” Shibli said.

The conditional approvals follow a BSEC decision earlier this month to make trading in bank-issued perpetual bonds mandatory on stock exchanges.

Earlier reports indicated that City Bank and Jamuna Bank were the first two banks to receive the necessary BSEC approvals to begin issuing perpetual bonds to strengthen their additional tier-1 capital base. At the time, nine banks were said to have been waiting for approval for similar issuances. This was before expectations that perpetual bonds would be listed and tradeable on the main boards of stock exchanges.

The BSEC decision on mandatory listing on stock exchanges is aimed at enhancing liquidity in the perpetual bond market.

BSEC

perpetual bonds

BSEC Frames Rules for Mandatory Trading of Banks’ Perpetual Bonds

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