KATHMANDU, APR 05, 2012
Interest rates for debentures that had gone up to as high as 12.5 per cent in the past have started decreasing due to the lowering deposit rates in the market in recent months. But its still higher than the savings interest rates.
Siddhartha Bank is coming up with corporate debenture issue worth Rs 400 million that will yield 11 per cent interest rate. In November 2011, Nepal Investment Bank had issued debentures worth Rs 300 million at 12 per cent coupon rate with a seven-year maturity period. In February, Nepal SBI Bank had also issued debentures worth Rs 400 million at 12.5 per cent coupon rate.
Siddhartha Bank has been granted approval by Securities Board of Nepal to issue seven-year redeemable corporate bonds — SBL Debenture 2075 — at a par value of Rs 1,000. The bank will sell Rs 80 million worth of bonds to the public and remaining bonds of Rs 320 million will be allotted to financial institutions and other institutional savers through private placement.
Earlier too in 2008, the bank had issued a different seven-year redeemable debenture –– Siddhartha Bank Debenture, 2072, at 8.5 per cent coupon rate. In recent times, banks have taken to issuing bonds as an instrument to raise liquidity. “Banks largely go for bonds to raise necessary funds if they find their capital adequacy will be short of the prescribed limit set by central bank,” pointed out spokesperson for Nepal Rastra Bank Bhaskar Mani Gyanwali.
Unlike equities, debentures are debt instruments that a company uses to borrow money from investors without collateral but with a promissory note that it will be repaid after a certain period and with a certain interest.
The debenture or bond units can be traded at the secondary market. However, Nepse has not seen any transaction of any single bond unit since it began listing bonds.
In order to meet its capital adequacy as prescribed by the central bank to be able to float more loans, banks are resorting to debenture issuances. “We allow banks to issue bonds to meet their capital adequacy if other factors are positive,” said Gyanwali.
In the secondary market, at present, there are 13 debentures belonging to 10 companies. Of the 10 companies, nine are commercial banks and the other is Nepal Electricity Authority. Corporate debentures amount to Rs 4.97 billion. In addition to corporate debentures, there are government bonds worth Rs 22.4 billion in the secondary market. Bonds issued by corporates and the government are primarily absorbed by banks and financial institutions to maintain their Statutory Liquidity Ratio, and they prefer not to sell the bonds as the profit obtained from trading these bonds is also much.
It is not only ignorance among general investors but also the higher return of shares in the earlier phase and higher deposit rates in the later phase which has overshadowed bonds trading. Likewise, it has also been neglected due to the absence of specialised market intermediaries who deal with fixed income brokerage houses.
Interest rates for debentures that had gone up to as high as 12.5 per cent in the past have started decreasing due to the lowering deposit rates in the market in recent months. But its still higher than the savings interest rates.
Siddhartha Bank is coming up with corporate debenture issue worth Rs 400 million that will yield 11 per cent interest rate. In November 2011, Nepal Investment Bank had issued debentures worth Rs 300 million at 12 per cent coupon rate with a seven-year maturity period. In February, Nepal SBI Bank had also issued debentures worth Rs 400 million at 12.5 per cent coupon rate.
Siddhartha Bank has been granted approval by Securities Board of Nepal to issue seven-year redeemable corporate bonds — SBL Debenture 2075 — at a par value of Rs 1,000. The bank will sell Rs 80 million worth of bonds to the public and remaining bonds of Rs 320 million will be allotted to financial institutions and other institutional savers through private placement.
Earlier too in 2008, the bank had issued a different seven-year redeemable debenture –– Siddhartha Bank Debenture, 2072, at 8.5 per cent coupon rate. In recent times, banks have taken to issuing bonds as an instrument to raise liquidity. “Banks largely go for bonds to raise necessary funds if they find their capital adequacy will be short of the prescribed limit set by central bank,” pointed out spokesperson for Nepal Rastra Bank Bhaskar Mani Gyanwali.
Unlike equities, debentures are debt instruments that a company uses to borrow money from investors without collateral but with a promissory note that it will be repaid after a certain period and with a certain interest.
The debenture or bond units can be traded at the secondary market. However, Nepse has not seen any transaction of any single bond unit since it began listing bonds.
In order to meet its capital adequacy as prescribed by the central bank to be able to float more loans, banks are resorting to debenture issuances. “We allow banks to issue bonds to meet their capital adequacy if other factors are positive,” said Gyanwali.
In the secondary market, at present, there are 13 debentures belonging to 10 companies. Of the 10 companies, nine are commercial banks and the other is Nepal Electricity Authority. Corporate debentures amount to Rs 4.97 billion. In addition to corporate debentures, there are government bonds worth Rs 22.4 billion in the secondary market. Bonds issued by corporates and the government are primarily absorbed by banks and financial institutions to maintain their Statutory Liquidity Ratio, and they prefer not to sell the bonds as the profit obtained from trading these bonds is also much.
It is not only ignorance among general investors but also the higher return of shares in the earlier phase and higher deposit rates in the later phase which has overshadowed bonds trading. Likewise, it has also been neglected due to the absence of specialised market intermediaries who deal with fixed income brokerage houses.
Source: THT
Interest rates for debentures that had gone up to as high as 12.5 per cent in the past have started decreasing due to the lowering deposit rates in the market in recent months. But its still higher than the savings interest rates.
Siddhartha Bank is coming up with corporate debenture issue worth Rs 400 million that will yield 11 per cent interest rate. In November 2011, Nepal Investment Bank had issued debentures worth Rs 300 million at 12 per cent coupon rate with a seven-year maturity period. In February, Nepal SBI Bank had also issued debentures worth Rs 400 million at 12.5 per cent coupon rate.
Siddhartha Bank has been granted approval by Securities Board of Nepal to issue seven-year redeemable corporate bonds — SBL Debenture 2075 — at a par value of Rs 1,000. The bank will sell Rs 80 million worth of bonds to the public and remaining bonds of Rs 320 million will be allotted to financial institutions and other institutional savers through private placement.
Earlier too in 2008, the bank had issued a different seven-year redeemable debenture –– Siddhartha Bank Debenture, 2072, at 8.5 per cent coupon rate. In recent times, banks have taken to issuing bonds as an instrument to raise liquidity. “Banks largely go for bonds to raise necessary funds if they find their capital adequacy will be short of the prescribed limit set by central bank,” pointed out spokesperson for Nepal Rastra Bank Bhaskar Mani Gyanwali.
Unlike equities, debentures are debt instruments that a company uses to borrow money from investors without collateral but with a promissory note that it will be repaid after a certain period and with a certain interest.
The debenture or bond units can be traded at the secondary market. However, Nepse has not seen any transaction of any single bond unit since it began listing bonds.
In order to meet its capital adequacy as prescribed by the central bank to be able to float more loans, banks are resorting to debenture issuances. “We allow banks to issue bonds to meet their capital adequacy if other factors are positive,” said Gyanwali.
In the secondary market, at present, there are 13 debentures belonging to 10 companies. Of the 10 companies, nine are commercial banks and the other is Nepal Electricity Authority. Corporate debentures amount to Rs 4.97 billion. In addition to corporate debentures, there are government bonds worth Rs 22.4 billion in the secondary market. Bonds issued by corporates and the government are primarily absorbed by banks and financial institutions to maintain their Statutory Liquidity Ratio, and they prefer not to sell the bonds as the profit obtained from trading these bonds is also much.
It is not only ignorance among general investors but also the higher return of shares in the earlier phase and higher deposit rates in the later phase which has overshadowed bonds trading. Likewise, it has also been neglected due to the absence of specialised market intermediaries who deal with fixed income brokerage houses.
Interest rates for debentures that had gone up to as high as 12.5 per cent in the past have started decreasing due to the lowering deposit rates in the market in recent months. But its still higher than the savings interest rates.
Siddhartha Bank is coming up with corporate debenture issue worth Rs 400 million that will yield 11 per cent interest rate. In November 2011, Nepal Investment Bank had issued debentures worth Rs 300 million at 12 per cent coupon rate with a seven-year maturity period. In February, Nepal SBI Bank had also issued debentures worth Rs 400 million at 12.5 per cent coupon rate.
Siddhartha Bank has been granted approval by Securities Board of Nepal to issue seven-year redeemable corporate bonds — SBL Debenture 2075 — at a par value of Rs 1,000. The bank will sell Rs 80 million worth of bonds to the public and remaining bonds of Rs 320 million will be allotted to financial institutions and other institutional savers through private placement.
Earlier too in 2008, the bank had issued a different seven-year redeemable debenture –– Siddhartha Bank Debenture, 2072, at 8.5 per cent coupon rate. In recent times, banks have taken to issuing bonds as an instrument to raise liquidity. “Banks largely go for bonds to raise necessary funds if they find their capital adequacy will be short of the prescribed limit set by central bank,” pointed out spokesperson for Nepal Rastra Bank Bhaskar Mani Gyanwali.
Unlike equities, debentures are debt instruments that a company uses to borrow money from investors without collateral but with a promissory note that it will be repaid after a certain period and with a certain interest.
The debenture or bond units can be traded at the secondary market. However, Nepse has not seen any transaction of any single bond unit since it began listing bonds.
In order to meet its capital adequacy as prescribed by the central bank to be able to float more loans, banks are resorting to debenture issuances. “We allow banks to issue bonds to meet their capital adequacy if other factors are positive,” said Gyanwali.
In the secondary market, at present, there are 13 debentures belonging to 10 companies. Of the 10 companies, nine are commercial banks and the other is Nepal Electricity Authority. Corporate debentures amount to Rs 4.97 billion. In addition to corporate debentures, there are government bonds worth Rs 22.4 billion in the secondary market. Bonds issued by corporates and the government are primarily absorbed by banks and financial institutions to maintain their Statutory Liquidity Ratio, and they prefer not to sell the bonds as the profit obtained from trading these bonds is also much.
It is not only ignorance among general investors but also the higher return of shares in the earlier phase and higher deposit rates in the later phase which has overshadowed bonds trading. Likewise, it has also been neglected due to the absence of specialised market intermediaries who deal with fixed income brokerage houses.
Source: THT
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