KATHMANDU: Citizens Saving Bonds floated by Nepal Rastra Bank (NRB) were undersubscribed by Rs 160.58 million, indicating people’s lack of appetite for fixed-income instruments.
On May 26, NRB floated Rs 2.50 billion worth of Citizens Saving Bonds with annual return of eight per cent. But till Tuesday, when the sales closed, bonds worth only Rs 2.34 billion were subscribed.
“This indicates people are more interested in capital appreciation instruments rather than fixed-income instruments. This is because securities with pre-determined yields do not provide additional gains even if held for quite a long time,” said Nara Bahadur Thapa, executive director of the Public Debt Management Department at NRB.
NRB had floated Citizens Saving Bonds, as a part of the government’s plan to raise domestic debt of Rs 52.75 billion by the end of this fiscal year to finance reconstruction works in the aftermath of the quake.
These bonds, with a maturity period of five years, were
targeted at general public, and the minimum threshold for investment was fixed at Rs 10,000.
Initially, NRB was pretty confident about full subscription of the bonds, as the devastating earthquake had affected almost every sector, from tourism, housing, insurance and banking to trade and manufacturing. Against this backdrop, it was deemed people would find it hard to find an instrument that promises return of eight per cent per annum.
But around that time, the stock market, which had suffered losses due to the earthquake, started making a recovery. Very soon, it recuperated all the losses and rebounded to the pre-earthquake level.
“When there are investment avenues where probabilities of better returns are higher, it is natural for people to get attracted towards those areas,” said Thapa, adding, “The Citizens Saving Bonds, however, are fully safe investment tools which can be used as collateral and provide a fixed return no matter what.”
NRB will issue the bonds to the subscribers on June 16.