The Tk 30 billion Sukuk was oversubscribed by nearly four times to Tk 109.25 billion in its fifth auction held at the central bank on Wednesday.
A total of 46 institutions - both conventional and Shariah-compliant financial institutions - and individuals took part in the auction, officials said.
Profit or rent for the Sukuk bonds has been fixed at 9.25 per cent. The profit will be paid on a half-yearly basis.
It is a social impact Sukuk for the construction of important bridges on rural roads (CIBRR-2) with the tenure of seven years, the officials added.
Under the project, 82 bridges will be constructed in 58 upazilas across the country, enhancing connectivity in rural areas.
Besides, work for river training will be implemented under the project.
Special purpose vehicles (SPVs) allocated the bond certificates as per quota, set by the Bangladesh Bank earlier, giving priority to the Shariah-based Islamic banks, non-banking financial institutions (NBFIs) and insurance companies, for the fifth auction of Sukuk bonds.
A separate Islamic securities unit under the Debt Management Department of the central bank acts as SPV.
As per the central bank criteria, 70 per cent of the Sukuk would be allocated to Shariah-based Islamic banks, NBFIs and insurance companies.
An additional 10 per cent will go to the Islamic branches and windows of conventional banks, while the remaining 20 per cent will be reserved for individual investors, provident funds, and deposit insurance schemes.
"We preferred to invest in the Sukuk bonds because they are risk-free and secured," a senior executive at a Shariah-based Islamic bank told the Financial Express (FE) while explaining the oversubscription of the Sukuk bonds.
He said the Islamic financial institutions, particularly banks, will be eligible to meet their statutory liquidity ratio (SLR) requirement, as set by the central bank, with the Sukuk bonds.
Currently, the required SLR is 13 per cent daily for the conventional banks and 5.50 per cent for the Shariah-based Islamic banks.
The government had already raised Tk 190 billion through issuing four types of Sukuk bonds for the implementation of different projects across the country.
Sukuk is an Islamic financial certificate, similar to a treasury bond, and structured to generate returns in compliance with Islamic finance principles.
siddique.islam@gmail.com
