Government issuing debentures worth Rs 10 billion, again

This fiscal year (2023/24) the government has announced an expenditure plan (budget) of Rs 1.75 trillion, among which it will raise Rs 1.24 trillion in revenues, Rs 49.94 billion in foreign grants, Rs 212 billion in external loans, and Rs 240 billion in internal loans. 

To meet the same, the government is issuing its fifth debenture in less than two months.

The Nepal Rastra Bank is set to issue a six-year tenure debenture worth Rs 10 billion, namely Development Bond 2086 ‘Jha’, after an auction on September 10.

Banking and financial institutions (BFIs), non-BFIs, insurance companies, corporates, and the public can participate in the auction scheduled at 3 p.m., following which, bonds will be awarded a day later on September 11.

The interest rate (coupon rate) of the debenture will be determined during the auction.

A debenture is a debt instrument, generally issued by governments and corporations, to raise capital or funds. Debentures lack the backing of collateral such that subscribers must rely on the creditworthiness and reputation of the issuer.

Earlier last month, the government raised public debt totalling Rs 35.84 billion by issuing four separate debentures worth — Rs 10 billion on August 3; Rs 10 billion on August 13; 5.84 billion on August 17; and Rs 10 billion on August 26. 

Meanwhile, the total public debt as of FY 2022/23 stands at Rs 222.16 billion, out of which Rs 112.83 billion is internal loans and Rs 109.33 billion is external loans, according to the Public Debt Management Office.