Foreign Employment Bond 2077 worth Rs 250 million undersubscribed; subscription of Rs 83.71 million

ShareSansar July 8:

“Foreign Employment Saving Bond 2077”, issued by the NRB in current fiscal year which was worth Rs 250 million with a coupon rate of 9 percent only had a subscription of Rs 83.71 million and the issue has  already been closed. Foreign employment bonds are targeted at migrant workers, Non Resident Nepalis (NRNs) and returnee workers.

Despite offering attractive returns, foreign employment bonds had flunked miserably in the past as well. The first foreign employment bonds, issued in fiscal year 2067, had seen subscription worth Rs 4 million of the total issue of Rs 1 billion at 9.75 percent interest. Likewise, in fiscal year 2068 too, only bonds worth Rs 3.3 million of the total issue worth Rs 5 billion were sold.

In the fiscal year 2069, foreign employment bonds worth Rs 8.6 million were subscribed out of total issue of Rs 1 Billion at an interest rate of 10 percent.  In the fiscal year 2069, NRB had offered bonds worth Rs one billion but migrant Nepalis including NRNs had applied for bonds worth only Rs 8.6 million.

Subscription of two foreign employment bonds issued in the fiscal year 2070 also had a low subscription.

Nara Bahadur Thapa, Executive Director of Public Debt Management Department pointed out reasons for low subscription of foreign employment bonds.  Investing in foreign employment bond does not offer capital gains like investing in shares; foreign employment bond does not offer holding gains like foreign exchange, People working abroad are more interested in buying lands; interest rate of the bond might be lower than the market interest rates, people might find it inconvenient to change foreign bond into cash easily.