Soneri Bank to exercise call option on Rs3bn bond
Soneri Bank Ltd is going to exercise the call option with respect to a Rs3 billion bond it issued in July 2015. The commercial lender told bondholders on Wednesday it’s going to use its right as a debt issuer to “call” or buy back its listed bond — called a term finance certificate (TFC) in local parlance — of Rs3bn prior to maturity. The bond was issued as an instrument of redeemable capital with a tenor of eight years. The issuer pays a mark-up of six-month Kibor plus 1.35 per cent per year on a semi-annual basis. Given its redeemable nature, Soneri Bank is calling back the bond before the maturity date of July 7, 2023. In other words, the bond issuer is paying off its debt early. This is typically a sign that the borrower expects market interest rates to slide downwards, which allows the debt issuer to re-borrow funds at a lower cost.