Bangladesh aims to tap international markets for the first time, targeting between $500 million and $1 billion in the next three months, a senior official said. On Saturday night, Tanvir Shahriar Ghani - the prime minister's special assistant overseeing investment and capital market affairs - said JPMorgan Chase & Co. is set to handle the transaction. Ghani, who also chairs the government's bond issuance committee, added that the sale still needs the green light from Prime Minister Tarique Rahman.
Global borrowing costs have climbed after recent US Federal Reserve increases, and that backdrop is steering how Dhaka thinks about yield. As Ghani put it, "The interest rates have gone up by 25 basis points, which will have an impact on emerging market rates. We are just going to be cautious about what the pricing is, and based on that we will proceed." He also said the government is balancing funding needs while remaining "sensitive to the cost of capital."
Early reception looks upbeat. Ghani reported that last week's informal discussions in Europe with institutional investors signaled robust interest, and the subsequent New York sessions were likewise limited to institutional buyers. He withheld details on the deal's structure, noting there are certain "legal issues" that must be taken "seriously." Bangladesh's central bank first floated the idea of a foreign bond in 2012 and revisited it later, but it never came to market.
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If the deal goes ahead, the yield will reflect today's higher-rate world and the caution Ghani described. He said "The interest level is extremely high for sovereign bonds." For anyone weighing emerging market exposure in their fixed income mix, the final terms on price and structure will be the tell on whether Bangladesh's debut earns a spot.
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