 |
| Bank |
At least four
companies have so far raised TK 345 corer through six commercial papers since
its introduction in the country in October 2013, with half of the funds
collected in just the last four months.
Many companies are
interested in CP as it is a low-cost alternative to bank loans, said Ali Reza Iftekhar,
managing director and chief executive of Eastern Bank that introduced the short
– term debt instrument in Bangladesh.
EBL has so far
arranged TK 100 corer through this channel for ACI and Shanta Properties and
has another TK 200 corer worth of deals in the pipeline, he added. Companies
issue commercial papers, a short-term unsecured debt instrument, to raise funds
financing needs. Financial institutions act as arrangers and agents for the
issuers.
Maturities on commercial papers rarely range any longer than
365 days, and the debt is usually issued at a discount, reflecting prevailing
market interest rate.
Since it is not backed by collateral, only firms with
high-quality debt ratings will easily finds buyers without having to offer a
substantial discount ( higher cost ) for the debt issue.
With CP, companies can now get funds at 10 -11 percent
interest against the normal lending rate of 13 percent, which explains their
rising popularity, according to Anis A
Khan, managing director of Mutual Trust Bank that already arranged TK 95 crore
this way.
COMMERCIAL PAPERS
ISSUER LEAD
ARRANGER AMOUTNT
(IN CORORES TK)
|
ACI (Oct 2013)
|
Eastern Bank
|
50
|
ACI ( Jun 2014 )
|
City Bank
|
75
|
Shanta Properties (Aug 2014)
|
Eastern Bank
|
50
|
Pran Agro (Dec 2014 )
|
Mutual Trust
|
45
|
Bangal Plastics ( Feb 2015 )
|
Mutual Trust
|
50
|
ACI (Mar 2015 )
|
IDLC Finance
|
75
|
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