HSBC arranges US $ 65 m deal for Commercial Bank

THE Commercial Bank of Ceylon Limited and HSBC announced the completion of a US$65 million two-year committed term loan facility (with an extension for a third year at the option of the borrower and lenders).

The agreement was signed at The Colombo Hilton yesterday.

The facility sets a new benchmark in the international market for Sri Lanka as it is the first true two-year committed loan from a non-sovereign Sri Lankan corporate entity.

Previously, non-sovereign loan offerings had been structured as one-year obligations with an extension for an additional year at the option of the borrower and lenders, or as a two-year facility with the lender having the option to demand payment of the loan after one year (effectively making it a one-year risk exposure).

Loans with committed tenures of two or more years carry a much steeper risk profile requiring a higher capital charge and therefore are not common from borrowers from unrated countries.

The success of this loan syndication epitomises the resourcefulness of the global giant HSBC in being able to draw on their international expertise and reach to attract investors to Sri Lanka at very competitive pricing, despite the longer tenure of the issue.

It is also noteworthy that there was no roadshow, with the strength of Commercial Bank credit and distribution power of HSBC considered being more than sufficient to ensure a successful syndication, officials said.

Participants in this loan for Commercial Bank are: Mandated Co-ordinating Arranger: The Hongkong and Shanghai Banking Corporation Limited. Co-ordinating Arrangers: ICICI Bank Limited, National Bank of Kuwait S.A.K. and Wachovia Bank, National Association.

Arrangers: The Arab Investment Company S.A.A., Indian Bank and Union National Bank. Senior Managers: Bank Austria Creditanstalt, The Export-Import Bank of the Republic of China and State Bank of India.