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WHAT IS BOND
A long-term debt instrument issued by a corporation or government. A debt security, under which the bond issuer owes the bond holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at a later date, termed the maturity. Thus a bond is a form of loan: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest. Interest is usually payable at fixed intervals (semiannual, annual, sometimes monthly).
CONVERTIBLE BOND
Bond holder can convert the face value of the bond into shares of common stock in the issuing company or cash of equal value, at an agreed-upon price.
Such bond is referred to as subordinate, because the debt providers (the lenders) have subordinate status in relationship to the normal bond. A subordinate bond carries higher risk, but also pays higher returns than other classes.
25% Convertible bond, which means the bond holder (investor) have the option of redeeming the entire face value of the bond in cash upon maturity or can redeem 75% in cash and convert 25% of the bond value in the common stock of BRAC Bank Ltd.
Credit Rating: rated as A+ by Credit Rating Information and Services Ltd (CRISL) Trustee: The City Bank Limited Issue Manager: IDLC Finance Limited
Drawbacks
A subordinate bond carries higher risk and it is ranked / prioritized lower than other debts or other classes of bonds, if the bond issuing company falls into liquidation or bankruptcy
Lack of awareness of investors about the bonds features and also about the bond market.
BASIC INFORMATION
Listed in Stock Exchange: 2007 Market Category: A Face Value: 1000.0 Market Lot: 5 Total no. of Securities: 3000000 Paid-up Capital: 3000 millions BDT (The bank issued 3 million bonds of Tk. 1,000 each worth Tk. 3000 million)
Credit Rating: A+ by Credit Rating Information and Services Limited (CRISL) Trustee: Investment Corporation of Bangladesh (ICB) Issue Manager: ICB Capital Management Limited (A subsidiary company of ICB)
2011 -------------- 13.20% 2010 -------------- 12.35% 2009 -------------- 12.35% 2008 -------------- 13.80% 2007 -------------- 12.64%
BASIC INFORMATION
Listed in Stock Exchange: 2010 Market Category: A Face Value: 1000.0 Market Lot: 3 Total no. of Securities: 801510 Paid-up Capital: 802 millions BDT (The company issued 801510 bonds of Tk. 1,000 each worth 802 millions TK)
Credit Rating: rated as A by Credit Rating Information and Services Limited (CRISL) Trustee: Industrial & Infrastructure Development Finance Co. Ltd (IIDFC) Issue Manager: Alliance Financial Services Limited (AFSL)
Effective rate of return (discount rate): 10.5% pa excluding tax exemption benefits and capital gain from bond to common stock conversion.
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THANK YOU
PRESENTED BY Ferdous Mahmud Shaon