Nasir Glass raises Tk 100cr through commercial papers
Nasir Glass Industries, a leading float-glass maker, raised Tk 100 crore through commercial papers to help cut high financing cost, which will allow the company to offer more price-competitive products.
The fund is raised in two tranches, each consisting of Tk 50 crore, with a validity of six months. Prime Bank issues bank guarantee against the subscription amount in favour of the subscribers.
“We want to swap our costlier financing options with a cheaper one,” Rezaul Karim, general manager of Nasir Glass Industries, said earlier.
The funds raised at 10 percent interest as opposed to the normal rate of 12-13 percent will mainly be used to meet working capital requirements, he said.
This is the 'first rated' commercial paper in Bangladesh, Prime Bank said in a statement.
A commercial paper is a short-term unsecured debt instrument issued by companies to meet their interim financing needs. The debt is issued at a discount from the prevailing market interest rates.
Since it is not backed by collateral, only firms with excellent credit ratings will easily find buyers without having to offer a substantial discount (higher cost) for the debt issue.
The commercial paper market is likely to expand about 29 times to Tk 10,000 crore in the next five years for the lower costs and easier access, according to a study by ACI, a leading local conglomerate.
Since its introduction in the country in October 2013, at least four companies have raised Tk 395 crore through six such papers with half of the funds collected in the last four months.
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