Bangladesh eyes debut international bond issue

DHAKA Wed Jan 23, 2013 6:45pm IST

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DHAKA Jan 23 (Reuters) - Bangladesh aims to sell its first international bond this year, officials said on Wednesday, taking advantage of low interest rates and soaring demand for emerging debt from yield-starved investors.

Deputy central bank governor Shitangshu Kumar Sur Chowdhury has been appointed to head a panel that will prepare the ground for the bond sale, including inviting bids from potential lead managers and arranging investor roadshows.

"In our first meeting we have decided to hold a meeting in March with banks who act as frontrunners to issue bonds, such as Standard Chartered and Citi NA," Chowdhury told Reuters.

"The government has decided to issue a sovereign bond. Exact volumes, timeframe, interest or tenure of the bond has yet to be decided. But things are going on the right direction," he added.

Chowdhury said the bond could be sized at $500 million or $1 billion.

Bangladesh's status as a least developed country means it is entitled to concessional loans from institutions such as the World Bank, International Monetary Fund and Asian Development Bank, but conditionality and other factors can mean such loans are disbursed only slowly.

LOAN DEAL

Dhaka has a three-year $987 million loan deal with the IMF, the first $141 million tranche of which was paid out in April last year. Earlier this month, the government raised oil prices by up to 11.5 percent to meet conditions for payment of the second tranche, which also include increasing electricity tariffs to cut subsidies.

Last year the World Bank cancelled a $1.2 billion credit line for a bridge project because of alleged corruption.

The government's plan to float bonds dates back to 2011, when high oil import bills coupled with a massive devaluation of the local currency caused foreign exchange reserves to dwindle.

Reserves started to improve from the middle of last year, reaching a record high of $13 billion early this month, although central bank officials say they remain vulnerable to oil costs.

Bangladesh has held a Ba3 rating with a stable outlook from Moody's and BB- sovereign rating with a stable outlook from S&P for three years.

Emerging market borrowers issued record levels of new bonds last year to take advantage of low borrowing costs and investors search for yield. Bolivia, Mongolia and Zambia issued debut bonds last year and more maiden issuers are expected in 2013. (Reporting by Ruma Paul; Editing by Anis Ahmed and Catherine Evans)

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