Bangladesh may soon see the issuance of the country’s first green sovereign Sukuk following its meeting with Indonesia as part of its capacity-building efforts for sustainable financing through the issuance of green Sukuk.
A delegation from Bangladesh consisting of representatives from the Ministry of Finance, the Prime Minister’s Office and Bangladesh Bank visited the Directorate General of Budget Financing and Risk Management (DJPPR) of Indonesia’s finance ministry to study the mobilization of climate finance from public and private funding and the issuance of sustainable instruments including the issuance of green Sukuk, which Indonesia has issued regularly since 2018.
During the meeting, representatives from Bangladesh Bank gave a presentation on its experience of issuing green bonds in Bangladesh, while DJPPR shared Indonesia’s experience in issuing green Sukuk including the background of the issuance, the issuance process, the achievements of green Sukuk issuance, as well as challenges and lessons learned from the issuance.
“The majority of delegates from Bangladesh were very interested and enthusiastic about asking about green Sukuk,” DJPPR said in a statement.
“The Bangladesh delegation really appreciates the sharing from DJPPR and they are very interested in adopting best practices in climate finance and sustainable development through the issuance of green instruments,” DJPPR added.
Bangladesh saw its first-ever green Sukuk in 2021, issued by multinational conglomerate Bangladesh Export Import Company (BEXIMCO) through its SPV Beximco Green-Sukuk Trust, raising a total of BDT28.22 billion (US$257.16 million).
The five-year Sukuk offering, with an initial issue size BDT30 billion (US$273.38 million), was divided into BDT22.5 billion (US$205.03 million) for private placement and BDT7.5 billion (US$68.34 million) for public offer. On the other hand, the government of Indonesia through the Ministry of Finance issued the world’s first US dollar-denominated green sovereign Sukuk facility in 2018.
The transaction comprised a US$1.25 billion five-year green Sukuk facility as well as a US$1.75 billion 10-year Sukuk tranche. The issuance was oversubscribed, attracting investors around the globe, signaling market demand for SRI even since then.