Tk 100 crore PFL-Sukuk bond is likely to be launched this month to bring diversity and depth into the market.
“PRAN Foods Limited (PFL) application for Tk 100 crore-Sukuk bond to Bangladesh Securities and Exchange Commission has already been finalized and soon be approved for trading,” a BSEC high official said.
Earlier Green Delta Capital Limited (GDCL) on behalf of PFL submitted the application to BSEC last year.
PRAN Foods Limited (PFL), a concern of PRAN-RFL Group on 6th April, 2016 appointed Green Delta Capital Limited as Mandated Lead Arranger for PRAN Foods Limited to raise up to BDT 1,000 Million through issuance of Sukuk (Islamic Bond).
Ms. Uzma Chowdhury, Director of PRAN Foods Limited told Business Mirror that they are hopeful about launching the bond very soon.
Sukuk is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds. Sukuk are structured in a way to generate returns to investors.
They are issued and traded in compliance with the principles of Shariah, which prohibit ‘riba’ or interest. When someone invests in sukuk, his money is put into the assets of a project or investment in order to generate profit.
The sukuk holders will receive a certificate from the issuer as evidence of ownership, and are entitled to receive periodic profit payments on the principal amount invested. Upon maturity, the sukuk holder will get back the principal amount of investment.
There are different types of sukuk including musharakah, mudharabah, murabahah and al-wakalah.
Bangladesh Securities and Exchange Commission is finalizing a set of rules for derivatives and sukuk to facilitate trading of the products in the country’s capital market.
BSEC officials said that the regulator took the move to versatile the market and to draw more investment to the market. They said that the capital market of the country was only equity based that made the market dull to the local and foreign investors.
A derivative is an investment instrument that consists of a contract between parties whose value derives from and depends on the value of an underlying financial asset.
The underlying asset can be financial (interest rate, currency), equity (index, single stock), and commodity (rice, jute, tea).
Specifically, derivative transactions involve transferring those risks from entities less willing or able to manage them to those more willing or able to do so. Derivatives can take the form of forward, future, option or any other hybrid contract.
The stock market regulator has recently sought public opinion on the draft of the BSEC (Alternative Trading Board) Rules-2018.
The proposed ATB would facilitate entry of new items to the stock market like corporate bonds, derivatives, sukuk and open-end mutual funds.
It is high time we introduce more comprehensive guidelines to bring greater transparency and accountability in the industry, said Associate Professor of BIBM Md. Alamgir.
For better liquidity management, more active participation of the Islamic banks in the interbank money market is essential, Mr Alamgir said adding that herefore, policy makers should think about having bonds like Sukuk or commodity murabaha for better liquidity management”, he added.