SAJIDA Foundation files for Tk300cr bond to finance microcredit
This will be the foundation’s second zero coupon bond, which will be unsecured, non-convertible, and fully redeemable.
SAJIDA Foundation, a non-governmental, non-profit voluntary organisation, has submitted an application to the securities regulator to issue a Tk300 crore bond for the purpose of funding microcredit initiatives.
This will be the foundation's second zero coupon bond, which will be unsecured, non-convertible, and fully redeemable.
The bond's tenure will be three years, with a discounted value of Tk253.8 crore, and the discount rate will range from 9.5% to 11.5%.
DBH Finance PLC will be the trustee of the bond, while BRAC EPL Investments and BRAC Bank arrangers.
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The bond will be issued among financial institutions, banks, insurance companies, and high-net-worth individuals through private placement.
Seeking anonymity, a SAJIDA Foundation official told TBS, "The foundation has applied to raise funds from the bond market mainly for debt diversification, which will be used in microfinancing."
After Covid, there was huge demand from the foundation's customers. Therefore, the organisation deemed the bond market suitable to meet this demand, he added.
"Although there is a tendency of NGOs to take foreign loans, it has reduced thanks to the taka devaluation. Also, the Bangladesh Bank has limited allowing such loans due to the weakening of the taka."
"Furthermore, bank loans are costly due to high-interest rates. For instance, a loan taken when a dollar was equal to Tk84, now has to be repaid at a rate of Tk110."
This is why it's better to raise money through bonds, and also because they allow a longer repayment period, the official added.
In May 2021, the Bangladesh Securities and Exchange Commission allowed the SAJIDA Foundation to issue a Tk100 crore green zero coupon bond.
In the 2021-22 fiscal year, SAJIDA Foundation earned Tk422.42 crore. Of the income, Tk298.92 crore from microfinancing, Tk21.95 crore from donor grants, Tk72.85 crore from investments, Tk12.67 crore from bank interests, Tk16 crore from the hospital, and Tk3 lakh from other enterprises.
In 1987, the SAJIDA Foundation started as a private family-funded charity.
The organisation has implemented many major development activities including microfinance, micro-insurance, health, education, and other specialised programs, specially designed for the underprivileged. Currently, SAJIDA works across 32 districts, covering a population of over 6 million.
SAJIDA owns 51% shares of Renata Limited. Dividends from Renata constitute a great part of SAJIDA's financial sustainability. SAJIDA also works with a consortium of national and international donors.
