The government has released the second phase of Shariah-based Sukuk bonds to collect another Tk 4,000 crore to attract investment in Sukuk, a bond-like instrument used in Islamic finance.
A Sukuk is an Islamic financial certificate, akin to a treasury bond, which complies with the Shariah laws.
The Sukuk's money will be financed for the implementation of 'Safe Water Supply Project across the country' and the five-year bond yields an annual return of 4.69 per cent. The existing gain tax at a rate of 4.0 per cent might be waived on transfer of assets to the Special Purpose Vehicle (SPV) in the Finance Bill-2021, officials said.
The second auction of Sukuk bonds will be held on June 9 (Wednesday) at 10 am at the Debt Management Department of the Islamic Securities Section of the Bangladesh Bank (BB) head office. It will continue till 12 noon. Interested bidders will be able to buy bonds of any amount of Tk 10,000 and its multiples.
Sukuk with a face value of Tk 4,000 crore for a period of five years will be issued through auction which will be valid till December 29, 2025, said a press release on Tuesday.
The successful bidders in the second bid would be notified by e-mail on the same day the amount of Sukuk allotted against their application, it said.
The transaction will be completed on June 10, the working day after the auction, by crediting the Al-Wadiyah or current account debit and securities accounts held by banks and financial institutions with BB.
A senior BB official said the move would help attract investment in Sukuk.
"Sukuk is a real asset-backed security and its issuing company will get back the asset after expiry of the leasing time or end of the term," he said.
On the occasion of the birth centenary of Bangabandhu Sheikh Mujibur Rahman, in the month of victory, the Ministry of Finance started the Sukuk issue under the Shariah-based investment agreement in the country. As part of this, Bangladesh Bank and Finance Department have recently signed a bilateral agreement.
In December 2020, the government issued the first-ever Tk 4,000 crore Sukuk for a safe water supply project.
Sovereign Sukuk is the main contributor of the global sukuk market.
According to the IMF Sukuk database, the amount of sovereign Sukuk reached $606.3 billion, or around 55 per cent of Sukuk issued globally, by the end of 2018.
As per the City Bank Capital Resources data, the country's bond market size is $37.5 billion. Of that amount, corporate bonds account for $2.5 billion.
In Malaysia, Sukuk is a popular investment instrument where 50-60 per cent of the transaction is conducted through the instrument.
Industry insiders said fiscal benefits could attract the investors from Malaysia to look into Bangladesh as another potential investment destination.
Finance Minister AHM Mustafa Kamal may propose the tax waiver while placing the national budget for fiscal year 2021-22 on June 03, an official of the ministry informed.
