Bangladesh Plans Debut Dollar Bond in Bid to Diversify Economy

(Bloomberg) -- Bangladesh may enter international debt markets with a dollar-denominated sovereign bond next year, as South Asia’s fastest-growing economy seeks funding to expand beyond its key garment-export industry.

The planned sale would follow the country’s first-ever offshore bond denominated in takas earlier this year, according to Salman Rahman, Prime Minister Sheikh Hasina’s adviser. That note was worth the equivalent of $9.5 million and issued by the World Bank’s investment unit, the International Finance Corp.

“Our government and central bank have been very conservative so far” in terms of foreign debt, Rahman said in an interview in London. “We are now realizing that we have moved forward and we have to start borrowing.”

The initial issuance will aim at creating a benchmark but the country may step up dollar borrowing in due course, depending on economic development and financial conditions, he said. Bangladesh is rated BB- at S&P Global Ratings, on par with Brazil, Greece and Macedonia.

Funds would be used primarily for improving infrastructure and diversifying the economy, including private-sector projects.

The IFC-issued taka bonds, privately placed in July, mature in 2022 and carry a coupon of 6.3%. They are also listed on the London Stock Exchange. The repayment of such offshore bonds is in the local currency, meaning investors assume the exchange-rate risk.

To contact the reporter on this story: Srinivasan Sivabalan in London at ssivabalan@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Marton Eder, Paul Wallace

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