Bangladesh is preparing to issue sovereign bonds in the international capital market for the first time, aiming to raise up to US$ 1 billion within the next three months, according to official sources.
The government is currently in the process of appointing global financial services firm JPMorgan Chase & C. as the issue manager for the debut bond, which is targeted for release by December this year.
A Bangladeshi delegation recently held meetings with institutional investors in several European countries and in New York of the USA.
A Bloomberg report noted that around 15 major global investment firms, including BlackRock, Pacific Investment Management Company (PIMCO), Texas Pacific Group (TPG), Macquarie, GoldenTree Asset Management and MetLife, have shown preliminary interest in the country's upcoming sovereign bond.
"Investor interest in our sovereign bond is extremely high," Tanvir Shahriar Ghani, special assistant to the Prime Minister on investment and capital market affairs, has recently said.
He heads a high-level committee formed by the Ministry of Finance in July to assess the feasibility of the issuance.
Tanvir, however, added that further discussions are necessary before finalising the bond's structure, interest rates, and legal aspects. "The government is closely monitoring the rising cost of borrowing in global markets, and the final decision will be made after evaluating investor rate expectations," he said.
If successful, the initiative will establish Bangladesh’s sovereign debt pricing benchmark in global capital markets for the first time, opening up direct foreign currency market-based financing in the future.
Strategic shift in foreign financing:
Historically, Bangladesh has relied heavily on concessional financing from multilateral development partners, including World Bank, Asian Development Bank (ADB), Japan International Cooperation Agency (JICA) and International Monetary Fund (IMF), as well as bilateral loans.
However, changing global interest rate conditions have altered borrowing terms, while Bangladesh faces rising development expenditure, debt repayment obligations, and dollar demand.
With the national budget for the current fiscal year set at Tk 9,38,000 crore, a significant deficit must be covered through financing. Entering international debt markets aims to diversify financing sources and position Bangladesh as a regular participant in global capital markets.
US$ bonds first, others under evaluation
The initial issuance is most likely to be US Dollar-denominated due to higher market liquidity. However, the government is also exploring the possibility of issuing Samurai bonds in Japanese Yen, Panda bonds in Chinese Yuan, Dim Sum bonds in Hong Kong, and Islamic Shariah-compliant Sukuk bonds in the future.
Bangladesh Bank has already held discussions with a delegation from the Export-Import Bank of China regarding potential Panda bond issuances.
Government officials emphasised that while the initial target is $500 million, the amount could be expanded up to $1 billion if market conditions remain favourable.
Nevertheless, the government remains cautious about its overall credit rating, foreign exchange debt servicing capacity, and borrowing costs to prevent overburdening future foreign debt.