Govt Sukuk auction Dec 29 to raise Tk 50b

The government will raise Tk 100 billion by issuing two Islamic bonds, the first one worth Tk 50 billion on December 29, to finance public-sector development projects, officials say.
One auction is scheduled to be held on the day at the central bank for issuing the Shariah-based bond to eligible banks, non-banking financial institutions (NBFIs), insurance companies and individuals.
The central bank, as a special-purpose vehicle (SPV) for the issuance of the upcoming government securities, has
already completed all necessary preparations to issue the second set of Sukuk bonds.

"We're also working to issue third Sukuk by the end of the current fiscal year (FY), 2021-22, for raising another amount of Tk 50 billion to implement another development project," a senior official familiar with the development told the FE Monday.
He also says the government has already decided to implement need-based government primary school-development project and rural infrastructure development project through issuing Sukuk bonds in two phases.
As per provisions, there are usually three parties involved with an Islamic Sukuk-originator, SPV and investors. Government is the originator of the Sukuk.
Bangladesh Bank (BB), the country's central bank, is acting as a SPV to administer the risk-free securities. It will also act as the trusty to resolve any potential conflict between the investors and the government.
The central bank has already set a Sukuk-allotment quota with priority on Shariah-based Islamic banks, NBFIs and insurance companies for the upcoming auction of the bonds, according to the official.
As per the BB criteria, Shariah-based Islamic banks, NBFIs and insurance companies will be eligible for getting 70-per cent Sukuk certificates while conventional banks and other financial institutions will be entitled to receive 15 per cent of the bonds.
Besides, 10 per cent of the Bangladesh Government Investment Sukuk (BGIS), generally known as Ijarah Sukuk, will be sanctioned to Islamic branches and windows of conventional banks while individual investors will be eligible to get the remaining 5.0 per cent.
"Interested individuals, including foreign nationals, may invest in the Islamic bonds through using their bank accounts," a BB senior official said in reply to a query.
He also says the government will invest Tk 50 billion, which is set to be collected through issuing the Islamic bonds for the implementation of a need-based government primary school-development project.
Islamic financial institutions, particularly banks, will be eligible to meet their statutory liquidity ratio (SLR) rules of the central bank with the BGIS, according to the central banker.
Currently, the required SLR is 13 per cent daily for conventional banks and 5.5 per cent for Shariah-based Islamic banks.
Sukuk is an Islamic financial certificate, similar to a treasury bond, and structured to generate returns in compliance with Islamic finance principles.
Investors will receive a profit of 4.65 per cent on their investment in the Islamic bonds. Profits will be paid on a half-yearly basis.
A client will have to invest a minimum of Tk 10,000 in the security, and there is no upper limit. Banks, corporate institutions and individuals will be permitted to invest in securities.
In FY'21, the government raised Tk 80 billion through issuing the first Sukuk for implementation of a water-supply project titled "Safe Water Supply for the Whole Country".
In the private sector, BEXIMCO, a leading business conglomerate of Bangladesh, has already issued asset-backed Green-Sukuk bonds worth Tk 30 billion for the first time in the country for expanding its businesses.
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