Sebon to amend regulation for rupee bond issuance

- POST REPORT, Kathmandu

Nov 8, 2014-

Securities Board of Nepal (Sebon) is all set to amend the Securities Registration and Issue Regulation to pave the way for Asian Development Bank (ADB) and International Finance Corporation (IFC) to issue Nepali rupee bonds.

The securities market regulator said it has almost finalised the draft amendments, by adding provisions on local currency bond issuance by the international financial institutions. “Out drafting team will possibly send the draft to our board for approval within a week,” said Sebon Director Niraj Giri.

As the current regulation does not have a provision on local currency bonds issuance by international institutions, Sebon was asked to amend the regulation after the government permitted ADB and IFC to issue such bonds.

IFC, the private sector arm of the World Bank Group, last April received approval for issuing bonds worth up to Rs 50 billion, while ADB was permitted to issue bonds worth the same amount in August.

As per the guideline issued by the government in October 2013, the two international lenders will have to use the raised amount in areas like hydropower, agriculture, and road and tourism infrastructure. ADB has indicated it could invest the funds in eight hydropower projects, including Upper Modi, Upper Modi A, Upper Trishuli I, Lower Solu, Lower Balephi, Kali Gandaki Govan, Tamakoshi III and Super Trishuli Hydro Electric Project.

According to Giri, amendment to the regulation allows the lenders to issue the bonds in instalments. “For the registration of the bonds, the government’s approval has been made mandatory,” said Giri.

In the case of domestic companies, it is not mandatory for them to take the government’s approval. International institutions issuing local currency bonds should also publish financial details about the bonds’ trading in the national media every quarter, according to Giri.  

The Finance Ministry has been asking Sebon to complete the amendment as the earliest. “In fact, our ministry does not have anything to do with the matter, but we have been asking Sebon to introduce the regulation as quickly as possible,” said Sishir Dhunga, joint secretary at the ministry.

ADB had told the Post in August it could take four-six months to issue the bonds after it receives necessary approvals from the government and regulators concerned.

Published: 09-11-2014 09:23

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