Trading of The City Bank Perpetual Bond will commence on the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) today (Monday) under the settlement category 'N'.
Perpetual bonds are fixed income securities with no maturity date and they are often considered a type of equity rather than debt. These types of bonds are not redeemable; instead provide a never-ending stream of interest payments.
Currently, six perpetual bonds are listed with the stock market and the City Bank Perpetual Bond is the seventh listed perpetual bond.
The stock market regulator -- Bangladesh Securities and Exchange Commission (BSEC)-- on June 23, 2020 accorded its consent to The City Bank for raising additional Tier-l capital through issuance of perpetual bond worth Tk 4.0 billion.
The bond is an unsecured, non-convertible, floating rate perpetual bond. The coupon rate will be 11 per cent to 14 per cent, as per the regulatory approval.
The City Bank raised the said amount through issuance of perpetual bond last year to meet additional Tier-I capital to support the bank's Basel III compliance in line with Bangladesh Bank guidelines on risk based capital adequacy.
The fund was raised from listed banks, insurance companies, regional rural banks, private organisations, trust funds and eligible investors through the private placement. The price per unit of each bond was Tk 1.0 million.
The City Bank Perpetual Bond subscription concluded on March 16, 2021. In a directive issued in May 2021, the securities regulator included a provision for the subscription of 10 per cent of a perpetual bond through public offer.
According to the BSEC (Debt Securities) Rules, 2021 and directive issued on May 23, 2021, if an issuer intends to raise debt capital through issuance of perpetual bond, it shall make a public offer for at least 10 per cent of its intended offer and must be listed on the bourses.
Previously, the perpetual bonds were issued only through private placement and they were not tradable at the stock market.
IDLC Investments is the trustee while City Bank Capital Resources is working as lead arranger of the bond.