The Central Bank (CB), continuing a process of relaxing foreign exchange rules and investment by foreigners, announced on Tuesday a fresh set of guidelines for foreign investments in local firms.
The CB said it has, with immediate effect, relaxed the regulations in relation to foreign investments in corporate debentures of local firms and foreign borrowings as follows:
(i) In the case of corporate debentures raised by local companies:
(a) The ceiling imposed on the interest rate of the debentures has been removed,
(b) The requirement for the maintenance of a sinking fund by the issuing company has been removed,
(c) The minimum tenor of the debentures has been reduced from the current level of five years to two years,
(ii) In the case of foreign borrowing:
(a) The current limit on borrowing aplicable to a local firm has been increased from US$ 20 million to US$ 50 million, and
(b) Local firms have been permitted to raise foreign loans against corporate or bank guarantees.
Other borrowing arrangements of a short-term nature and those by newly incorporated firms would also be considered for approval by the CB, based on the merits of each case, the statement added. “These new procedures are expected to support the currently expanding economic activities which require alternative financing sources at a competitive cost,” it said.