Meghna Bank and Southeast Bank have obtained approval to issue subordinated bonds to raise funds.

Subordinated debt is debt that ranks below other debt in terms of claims on assets.

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In the event of default, the holder of a subordinated debt cannot satisfy the claims on the assets of the borrower until the claims of the holders of senior debt are satisfied.

The Bangladesh Securities Commission (BSEC) made the decision at a board meeting on Sunday.

The Bank of the South East would issue an unsecured, non-convertible floating rate bond valued at Tk 500 crore through a private placement.

Each unit of the bond is Tk 1 crore and its coupon rate ranges from 7 to 9%.

It would be issued to financial institutions, mutual funds, insurance companies, listed banks, businesses and other eligible investors.

With the proceeds of the bond, the lender will strengthen its additional Level II capital base.

Meghna Bank has obtained approval of its non-convertible, fully redeemable, coupon bearing subordinated bond worth Tk 200 crore.

Its coupon rate ranges from 7% to 9% and would be issued to an institutional investor and other eligible investors.

The face value of each unit of the bond is Tk 1 crore. With the proceeds from the bonds, the bank will strengthen its additional Tier II capital base.