The Ministry of Finance (MoF) has forwarded International Finance Corporation (IFC)’s proposal to issue local currency bonds to the Cabinet for approval.
If Cabinet endorses the decision, the private sector lending arm of the World Bank will be the first international financial institution to float Nepali rupee bonds to raise funds required by the private sector for investment in development projects.
“We forwarded the proposal to the Cabinet today,” said a high-ranking MoF official on condition of anonymity. “Once the approval is given, the MoF, Nepal Rastra Bank and Securities Board of Nepal will decide on the processes that the IFC needs to follow prior to issuing the bonds.”
Although the IFC had filed an application at the MoF to issue local currency bonds worth $500 million (approximately Rs 50 billion) in December, it was not forwarded to the Cabinet earlier due to the delay in expansion of the Cabinet. In the meantime, MoF was also undecided over whether to extend a blanket approval to IFC’s proposal without making it declare the interest spread, yield, maturity and types of projects that it would finance.
“We have now decided to discuss these matters at the time when the IFC takes a final decision to float bonds,” the MoF official said, adding, “We hope such flexibility will send a message that Nepal is a potential destination for foreign investment.”
The IFC, which has already floated such securities in over 30 countries globally, plans to issue bonds worth around $500 million within the next five years ‘depending on actual need to disburse funds for relending’.
“We may float bonds worth $50 million a year or even $100 million a year, depending on the demand for loans from the private sector. But I want to assure we won’t float bonds just for the sake of it. It has to have an impact in the country’s development process,” IFC resident representative Valentino S Bagatsing had previously told The Himalayan Times in an interview.
The money raised from sales of these bonds would be lent to the private sector for investment in projects ranging from infrastructure, banking and telecommunications to agro business and tourism, among others, according to Bagatsing.
The government had paved the way for international financial institutions like the IFC to issue local currency bonds here, following issuance of a guideline on local currency bonds on October 8.
As per the guideline, international financial institutions with AAA credit rating from global credit rating agencies can float such bonds here.
The MoF hopes this facility will facilitate collection of large sums of money required for construction or implementation of huge projects. This will also allow the government to mobilise additional funds from domestic sources, reduce country’s reliance on foreign loans, open new investment avenue for institutional investors, prop up country’s capital market and provide another tool for liquidity management.
source:the himalayan times,25 march 2014
LINK
If Cabinet endorses the decision, the private sector lending arm of the World Bank will be the first international financial institution to float Nepali rupee bonds to raise funds required by the private sector for investment in development projects.
“We forwarded the proposal to the Cabinet today,” said a high-ranking MoF official on condition of anonymity. “Once the approval is given, the MoF, Nepal Rastra Bank and Securities Board of Nepal will decide on the processes that the IFC needs to follow prior to issuing the bonds.”
Although the IFC had filed an application at the MoF to issue local currency bonds worth $500 million (approximately Rs 50 billion) in December, it was not forwarded to the Cabinet earlier due to the delay in expansion of the Cabinet. In the meantime, MoF was also undecided over whether to extend a blanket approval to IFC’s proposal without making it declare the interest spread, yield, maturity and types of projects that it would finance.
“We have now decided to discuss these matters at the time when the IFC takes a final decision to float bonds,” the MoF official said, adding, “We hope such flexibility will send a message that Nepal is a potential destination for foreign investment.”
The IFC, which has already floated such securities in over 30 countries globally, plans to issue bonds worth around $500 million within the next five years ‘depending on actual need to disburse funds for relending’.
“We may float bonds worth $50 million a year or even $100 million a year, depending on the demand for loans from the private sector. But I want to assure we won’t float bonds just for the sake of it. It has to have an impact in the country’s development process,” IFC resident representative Valentino S Bagatsing had previously told The Himalayan Times in an interview.
The money raised from sales of these bonds would be lent to the private sector for investment in projects ranging from infrastructure, banking and telecommunications to agro business and tourism, among others, according to Bagatsing.
The government had paved the way for international financial institutions like the IFC to issue local currency bonds here, following issuance of a guideline on local currency bonds on October 8.
As per the guideline, international financial institutions with AAA credit rating from global credit rating agencies can float such bonds here.
The MoF hopes this facility will facilitate collection of large sums of money required for construction or implementation of huge projects. This will also allow the government to mobilise additional funds from domestic sources, reduce country’s reliance on foreign loans, open new investment avenue for institutional investors, prop up country’s capital market and provide another tool for liquidity management.
source:the himalayan times,25 march 2014
LINK
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