BSEC, UNDP sign deal to strengthen thematic bond market

Bangladesh Securities and Exchange Commission (BSEC) and the United Nations Development Programme (UNDP) have taken an initiative to strengthen the thematic bond market to increase environmentally friendly and socially development-based investments in the capital market.

A Memorandum of Understanding (MoU) was signed between the two organizations on Wednesday to build a framework for sustainable finance.

The Mou titled 'Sustainable Finance Collaboration' was signed by BSEC Chairman Khandaker Rashed Maksud and UNDP Bangladesh Resident Representative Stefan Liler at BSEC headquarters in Agargaon in the capital.
Under the deal UNDP Bangladesh will work to introduce sustainable finance and investment taxonomy, providing pre-and post-issuance technical assistance to thematic bond issuers, training the commission and relevant stakeholders, and sharing experiences with emerging economies.

In addition, UNDP will also support project monitoring, bond reporting capacity building, introduction of impact measurement and management frameworks according to international standards, and development of a third-party verification systems to ensure proper use of thematic bond funds.

Overall, this partnership will contribute to achieving long-term development goals through the issuance of green, social, climate, SDG and other sustainable thematic bonds.

A thematic bond is a bond through which there is an obligation to spend the money collected on a specific purpose or theme. That is, money in a general bond can be used for any purpose, but money in a thematic bond has to be used in a specific sector or goal.

The main types of thematic bonds are - green bonds to finance environmentally friendly projects such as solar power, waste management; social bonds to finance social development works such as healthcare, affordable housing; sustainability bonds to finance both green and social projects; Climate bonds to finance large projects to address climate risks and SDG bonds to achieve the United Nations Sustainable Development Goals are worth mentioning.

BSEC Chairman KhandakerRashedMaksud said at the event that BSEC, as a regulatory body, is committed to the continuous improvement of market management.

We are working to build a strong and credible market structure by strengthening good governance, increasing transparency and strengthening investor confidence.

RashedMaksud also spoke about ensuring a supportive and predictable regulatory environment through partnerships with UNDP and other stakeholders. He emphasized the importance of establishing the capital market as a source of long-term financing, developing the bond market and developing thematic bonds.

UNDP Bangladesh Resident Representative Stefan Liler said at the event that the Bangladeshi capital market has great potential for raising long-term capital in the environmental and social sectors through thematic bonds.

It is essential to graduate from the Least Developed Country (LDC) status, avoid the middle-income trap, and increase investment to address climate risks. Thematic bonds can play a catalytic role in mobilizing domestic and international capital in these areas.

Stefan Liler also said that UNDP is committed to strengthening the enabling environment for the thematic bond market in Bangladesh through its partnership with BSEC.

UNDP Bangladesh Program Specialist Dr.MalihaMuzammil, Country Economic Advisor YoussParre, and BSEC Commissioner Md. Ali Akbar, FarzanaLalarukh, and senior officials from both organizations were present at the MoU signing ceremony.