NRB is issuing Development Bond-2081 worth Rs 5 billion; shall absorb excess liquidity

ShareSansar June 11:

Nepal Rastra Bank has published a notice regarding issuance of Rs 5 billion development bonds with a maturity period of 9 years named “Development Bond 2081”.

Both individual as well as institutional investors could directly or indirectly bid for a minimum of Rs 50 thousand, quoting an interest rate, by 3PM on Jestha 28, 2072 (today).  The sealed bids can be submitted at the NRB’s Public Debt Management Department, Thapathali, Kathmandu or at the bank’s branches outside the Valley.

The bond will be allotted on Jestha 29, 2072.

Classes A, B and C BFI’s cannot apply for the bond in non-competitive bidding.

The interest rate of the bond will be fixed by looking at the interest rates proposed by the participants taking part in the competitive bids.

The pay out of principal and interest amount under the bond will start from Jestha 29, 2081. The interest payout will take place in a half-yearly basis and the interest earned will be taxable.   

Interested Parties can file for bonds worth minimum Rs 50,000 and maximum bonds worth an amount not exceeding the size of total issue and divisible by 50,000 without remainder.

The auction form for the development bond is available at the bank’s website http://www.nrb.org.np.

The lowest interest rate bidders will get the first priority.

The interested bidder must also submit 2.50 percent of the bid amount on the central bank’s account.

Altogether 80 percent of the bond amount is allotted for competitive bidding and the remaining 20 percent will be sold without competition, and if there is not enough application for the entire amount allotted for indirect bid, the remaining amount will be transferred for direct bid.

The central bank has further informed that if the bond is oversubscribed for the non-competitive bid then it will be allotted on a proportional basis.

The amount submitted by the non-allottees will be refunded without any interest within seven days after the auction is held.

The secondary trading of the bond will be done through Nepal Stock Exchange (NEPSE).

The Rastra Bank had earlier issued development bond 2079 worth Rs 5 billion with a maturity period of seven years.

An interest rate of 3.44 percent had been fixed for it. The bond received an application for Rs 42 billion for the same.

There is an excess liquidity of more than Rs 90 billon in the banking system of the country. There has not been much supply of loan after the massive Earthquake of April, 25. Also, the money has been coming from all over the world for the relief work to help the affected person, which is making deposits grow massively in the system.