The trustee of the debt instrument, Sandhani Life Insurance Company, has already written to the issuer, BEXIMCO, seeking a solution. BEXIMCO has yet to reply, according to officials of Sandhani Life.
"Perhaps the company's fund for paying interest has run out. We are going to hold a meeting with bondholders very soon to inform them of the situation," said Md. Mizanur Rahman, company secretary of Sandhani Life Insurance.
He added that the Bangladesh Securities and Exchange Commission (BSEC) has been made aware of the suspension of the interest payment.
A bondholder told The FE that he was supposed to receive his monthly installment by September 15. With no money coming into his account, he reached out to the trustee but did not get any "satisfactory answer."
"We expect strong regulatory action to settle the matter," the bondholder added, wishing not to be named.
Preferring anonymity, an official of Sandhani Life Insurance said his organisation was doing everything in its power and had also sought regulatory intervention to address the issue.
The company secretary of BEXIMCO, Mohammad Asad Ullah, could not be reached for comment.
In April 2024, the securities regulator approved BEXIMCO's unsecured zero-coupon bonds, intended to raise Tk 15 billion to repay costly debts and fund a township project.
By definition, zero-coupon bonds are issued at a deep discount to their face value. Investors receive the full value at maturity, with the gap between the purchase price and the face value serving as the return on investment.
Asked why the bond's payment feature does not match the definition of zero-coupon bonds, the trustee told The FE that the BSEC had given its consent to the bond carrying a monthly interest payment feature.
BEXIMCO offered a 15 per cent annual interest rate, much higher than the 12 per cent lending rate in the market at the time of the bond issuance.
Despite the remarkably high interest rate, BEXIMCO was able to collect only Tk 5 billion of the proposed Tk 15 billion. Bondholders are scheduled to receive interest on different dates depending on when they purchased the instrument.
According to the trustee, the greater portion of the bond proceeds was used to repay loans, while the remaining portion was injected into a housing project - Maya Nagar - in Sripur upazila of Gazipur district.
A previous disclosure said the housing project was supposed to build 18,000 apartments along with healthcare, education, entertainment, sports, and recreation facilities.
But work on the housing project came to a halt after the ouster of the previous government, the trustee said.
Industry insiders noted that in the prevailing macroeconomic context, it was difficult to make a business profitable by raising funds at an interest rate of 15 per cent.
Nevertheless, many investors were lured into buying the instrument because of its high yield.
"It would have been easier for us to settle the problem had the housing project been in operation. Now, we are in trouble under the pressure of the bondholders," said an official of Sandhani Life Insurance who is involved in the operation of the zero-coupon bond.
A senior official of Eastern Housing Limited said their real estate business had already been sluggish because of declining apartment sales.
"It's very difficult to make profits from a project with loans unless it is completed within the expected timeframe. The loan burden becomes heavier when a housing project faces any halt," he added, seeking anonymity.
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