NIC Asia Bank set to issue debentures

KATHMANDU:

NIC Asia Bank is launching debentures worth Rs 400 million at 7.25 per cent interest rate.

The bank will issue ‘7.5% NIC Asia bond 2077’ at par value of Rs 1,000. This is the second debenture issue of the fiscal. The issue will be open from May 4 to 7.

Credit rating agency — ICRA Nepal — has assigned a rating of [ICRANP] LA- rating to the bonds, meaning that the bonds have adequate degree of safety regarding timely servicing of financial obligations. However, the rating was assigned to the bonds proposed by NIC Bank before it merged with Bank of Asia in July 2013.

With the interest rate in the financial market plunging, the coupon rate

offered by debentures has also gone below eight per cent in this fiscal year. A month ago, Nepal SBI Bank had issued 10-year bond worth Rs 200 million at 7.9 per cent rate.

With short-term interest staying below one per cent and lending rate nearing 11 per cent, fixed income securities have started to lower their rates as well.

Last year during this period, three commercial banks had launched debenture issues worth Rs 1.2 billion. However, this time banks are struggling to dispose excess liquidity rather than raise funds to make lending.

Citizens Bank International had also obtained credit rating for their bonds last year, but it has yet to offer it for sale.

Source: THT