GP repays $60m private bond debt before maturity
Monday, 4 January 2010
A Z M Anas
Saddled with cash, the country's biggest mobile telephony firm Grameenphone (GP) has repaid US$60 million (Tk 4.25 billion) in debt issued via a privately placed bond, a year before its maturity, bankers said.
The cellphone company with over 22 million subscribers has paid off the debt, as it is now swimming in huge liquidity raised through the country's largest initial public offering (IPO).
Last year, GP was forced to issue the bond to help refinance a portion of its short-term debt estimated at $120 million, considered costlier than mid-term or longer-term loans.
"GP's repayment was not at all surprising. We were ready for it," a banker said.
But he said the payment comes at a time when the country's banking system is struggling to cope with the excess liquidity that has reached historic proportions.
GP, 62 per cent owned by Norway's Telenor and the rest by Grameen Telecom, a non-profit arm of Grameen Bank, controls 44 per cent of the country's highly competitive mobile market.
In its proposal to investors, the company said it would not incur "additional debt with the bond, as the existing short-term credit will be refinanced to reduce liquidity risks and better match the assets-liability profile of the company."
But the earlier repayment of the bond made banks unhappy, as the country's banking system is flush with excess liquidity, which topped Tk 35 billion.
Bankers said the news was seemingly disappointing for the cash-rich AK Khan and Company Limited, which will now get less interest from bank deposits than the bond yielding 14.5 per cent. The company put Tk 1.5 billion into the bond, or one-third of the total bond sale.
AK Khan is also flush with cash after it sold off its entire stake in AKTEL to the top Japanese mobile operator, NDT Do Co Mo, for $350 million. It had 30 per cent share in the country's third largest mobile operator, majority controlled by Malaysia's Telecom Malaysia.
At 14.5 per cent fixed interest rate, the 'unsecured' and 'non-convertible' bond, was regarded as the ninth corporate bond in Bangladesh.
The country's bond market is the smallest in South Asia, with banking assets dominating the financial sector, according to the World Bank.
The World Bank, in a report, said the eight corporate bonds were issued through private placement, partly because of the 'little confidence' of public in corporate debt as stemming from the large-scale default of publicly offered corporate bonds in the financial market's recent history.
The Bangladesh unit of American Citibank NA was the lead arranger of the issuance of "unsecured," and "non-convertible" GP bond.
The country's total mobile phone subscribers have so far reached over 50 million, with GP remaining the top operator (22.75 million), followed by Egyptian Orascom-owned Banglalink 12.99 million, and Japanese-Malaysian Axiata (8.87 million).
Saddled with cash, the country's biggest mobile telephony firm Grameenphone (GP) has repaid US$60 million (Tk 4.25 billion) in debt issued via a privately placed bond, a year before its maturity, bankers said.
The cellphone company with over 22 million subscribers has paid off the debt, as it is now swimming in huge liquidity raised through the country's largest initial public offering (IPO).
Last year, GP was forced to issue the bond to help refinance a portion of its short-term debt estimated at $120 million, considered costlier than mid-term or longer-term loans.
"GP's repayment was not at all surprising. We were ready for it," a banker said.
But he said the payment comes at a time when the country's banking system is struggling to cope with the excess liquidity that has reached historic proportions.
GP, 62 per cent owned by Norway's Telenor and the rest by Grameen Telecom, a non-profit arm of Grameen Bank, controls 44 per cent of the country's highly competitive mobile market.
In its proposal to investors, the company said it would not incur "additional debt with the bond, as the existing short-term credit will be refinanced to reduce liquidity risks and better match the assets-liability profile of the company."
But the earlier repayment of the bond made banks unhappy, as the country's banking system is flush with excess liquidity, which topped Tk 35 billion.
Bankers said the news was seemingly disappointing for the cash-rich AK Khan and Company Limited, which will now get less interest from bank deposits than the bond yielding 14.5 per cent. The company put Tk 1.5 billion into the bond, or one-third of the total bond sale.
AK Khan is also flush with cash after it sold off its entire stake in AKTEL to the top Japanese mobile operator, NDT Do Co Mo, for $350 million. It had 30 per cent share in the country's third largest mobile operator, majority controlled by Malaysia's Telecom Malaysia.
At 14.5 per cent fixed interest rate, the 'unsecured' and 'non-convertible' bond, was regarded as the ninth corporate bond in Bangladesh.
The country's bond market is the smallest in South Asia, with banking assets dominating the financial sector, according to the World Bank.
The World Bank, in a report, said the eight corporate bonds were issued through private placement, partly because of the 'little confidence' of public in corporate debt as stemming from the large-scale default of publicly offered corporate bonds in the financial market's recent history.
The Bangladesh unit of American Citibank NA was the lead arranger of the issuance of "unsecured," and "non-convertible" GP bond.
The country's total mobile phone subscribers have so far reached over 50 million, with GP remaining the top operator (22.75 million), followed by Egyptian Orascom-owned Banglalink 12.99 million, and Japanese-Malaysian Axiata (8.87 million).