NRB announces issue for foreign employment bond

Despite the lukewarm response in previous years, the central bank has not yet given up on foreign employment bonds as it has tenaciously come up with the latest offering. Nepal Rastra Bank (NRB) has announced the issue of Foreign Employment Bond 2075 worth Rs one billion aimed at Nepali migrant workers and Non-Resident Nepalis (NRNs). The bonds will be sold to the target buyers in 11 countries through six designated agents. This year also, the bond is offering a coupon rate of 10.5 per cent for a five-year tenure. The issue is open from July 2 to July 10. “Though the previous issues of foreign employment bonds barely had any takers, we are hoping this year that the coupon rate of 10.5 per cent and a few amended provisions will increase the number of interested takers,“ said director of the central bank's Public Debt Management Department Dr Gopal Bhatta. This year, NRNs and migrant workers in Malaysia, Saudi Arabia, Qatar, Kuwait, Bahrain, UAE, US, UK, Australia, Japan and Israel can purchase the bonds in multiples of Rs 5,000 through the agents. The bonds can be purchased by Nepali workers who have returned from India as well. Since the designated agents do not have authority to remit money from South Korea, Nepali workers in South Korea will not be able to buy the bonds. Migrants who have returned from foreign jobs within the last four months and family mem bers of migrant workers can also purchase the bonds. “This instrument provides an attractive return to investors at present when fixed deposits are offering about eight per cent interest,“ pointed out Dr Bhatta. These bonds can be an excellent investment instrument for Nepalis working abroad. It provides assured and almost riskfree return of 10 per cent, which is quite high in the current market scenario. Likewise, bond buyers can safely send money home to be kept in banks without paying remittance commission to send money home. Last year, NRB included NRNs also in the targeted buyer group, but they also did not warm up to the idea. Despite the attractive interest rate offered in the previous three fiscal years, foreign employment bonds did not even got 10 per cent subscription. In fiscal year 2011-12, of the total issue worth Rs one billion, agents were able to sell foreign employment bonds worth Rs 8.6 million only. Likewise, in fiscal year 2009-10 -the first issue of foreign employment bonds in Nepal -bonds worth only Rs 4.6 million of the total issue of Rs one billion were subscribed. Likewise, in 2010-11 too, only bonds worth Rs four million of the total issue worth Rs five billion were sold.