2020 was a break through year for bonds

The stock market regulator this year approved 23 companies to raise a total of Tk 9,017 crore from the capital market by issuing a bond, a higher than average amount.

Between 2012 and 2019, the amount raised through averaged around Tk 5,000 crore.

But this year, the amount is almost double, suggesting the country’s moribund bond market is finally getting the much-needed impetus.

“Our stock market has remained only equity-based. I will focus on launching bonds, debentures, Sukuk and alternative investment funds in the market,” Shibli Rubayet ul Islam, chairman of the Bangladesh Securities and Exchange Commission.

Islam took charge of the country’s securities regulatory body in May.

As many as 85 per cent of the approvals were given the new commission.

Coincidentally, the approvals for bond issuance came at a time when the economy was reeling from the fallout of the global coronavirus pandemic, suggesting the companies are not engulfed in doom and gloom.

The funds would largely help in increasing the strengthen the capital base and ultimately help the economy to recover at a faster pace.

Meanwhile, the country’s moribund secondary bond market got a shot in the arm after the securities regulator recently allowed treasury bonds to be traded through the beneficiary owner’s (BO) accounts.

The instructions have been dispatched to resolve all legal issues very soon. 

Currently, in Bangladesh, there is no secondary market activity of the bonds and it makes the bond market almost non-functional.

“There had been many reform initiatives in the stock market in the last few years, but I would try to implement those reforms. If these are implemented, the stock market would be sustainable for a long time,” Islam added.

The expected growth of the capital market will be possible when there is a good mix of instruments, said Rezaul Karim, executive director and spokesperson of the BSEC.

The recent reforms of the capital market will help to achieve the expected levels of economic growth, he added. 

“I welcome this move,” said Abu Ahmed, an honorary professor of the Dhaka University’s economics department.

But there should be specific directives for introducing a secondary bond market where government-sponsored bonds can be traded.

This will encourage the private sector to issue more bonds for raising capital for long-term investment, he added. 

A total of 221 treasury bonds are listed on the stock exchange. Treasury bonds of five, 10 and 15 years of tenure began to be listed on the Dhaka bourse from 2005.

The 13 recommendations made by a tripartite committee to facilitate the trading of government securities in the secondary market of the stock exchanges. 

The nine-member committee is headed by Khurshid Alam, general manager of the BB’s debt management department, and comprises officials of the BSEC and the Dhaka Stock Exchange.

The committee suggested that the government provide policy support to engage non-resident Bangladeshis in the country’s bond market and give fiscal support for the investors for the development of the secondary bond market.