IFC asks govt to bring guideline on rupee bonds

KATHMANDU, AUG 16 -

International Finance Corporation (IFC), the private sector arm of the World Bank Group, has asked the government to introduce a guideline guiding the issuance of Nepali rupee bonds at the earliest.

Valentino S Bagatsing, resident representative - head of office of IFC in Nepal, said they have been awaiting the directive for the last 15 months.

“We will talk to local and international investors after the directive is issued,” he said at a press meet here on Thursday.

Local currency bonds are issued to attract both local and foreign investment as they help in long-term financing.

Bagatsing said the issuance of such bonds in Nepal would draw the attention of foreign investors towards Nepal at a time when several other countries are competing to attract foreign investment.

IFC has so far issued such bonds in 30 countries, with recent issuance in Nigeria and Ghana. “After IFC issued local currency bonds in Ghana a month ago, JPMorgan Chase, an investment bank, has put the country on its list of good investment destination,” said Bagatsing.

He said IFC has started talks with a few Nepali banks for underwriting of the bonds. “NMB Bank, Ace Development Bank and Nepal Investment Bank Limited are among the banks we talked with,” he said.

NMB Bank CEO Upendra Poudel said there had been initial discussions on the matter. “We are interested not only in underwriting the bonds, but also in investing in them,” he said. “If the bonds are issued, they will be alternative investment avenues for banks too.”

Bagatsing, however, said IFC has not determined the size of the bonds to be issued. But sources with knowledge of the matter said the size would be anywhere between $100 million and $500 million.

A finance ministry official said they were in the initial stages of preparing the draft of the directive. The budget for the current fiscal year has opened the door for credible international financial institutions to issue local currency bonds.

Meanwhile, IFC said it was also looking forward to investing in hydropower, tourism, agri business and financial sector. It has already invested in the sectors to some extent.

As of June 2013, IFC has committed investment worth $48 million, an IFC statement said.

Source: The Kathmandu Post