Bank of Ceylon’s 30 mn debenture issue opens

Sara Pathirana

The Bank of Ceylon Rupee Debenture Issue will open today. This would be the fourth and largest issue in the financial market, for a bank.

The issue is for 30 million debentures of Rs 100 each, amounting to Rs 3 billion with an option to issue further 30 million debentures to raise up to Rs. 6 billion in the event of an over subscription.

P A Lionel, Deputy General Manager International, Treasury and Investments of BOC and Dr. Gamini Wickramasinghe, Chairman Bank of Ceylon at the press conference on the BOC debenture issue. Picture by Sumanachandra Ariyawansa

“We had witnessed three significant events in the history of the Bank of Ceylon. We have issued an international bond of US $ 500 million and have also successfully achieved the one trillion mark balance sheet, which is a remarkable achievement. I see the issuing of the largest debenture today as the third milestone in our history,” said P. A. Lionel, Deputy General Manager of Treasury and Investments, Bank of Ceylon.

He said that foreign investors were also able to come into the investment. However this is mainly aimed towards the local investors since they have shown an interest in debentures. “Local foreign banks have also indicated an interest,” he said.

The long term fund base raised through this debenture issue could effectively be utilized to finance the long term financial needs in the priority sectors of the country’s economy such as exports, agriculture, tourism, infrastructure/manufacturing industry and SME etc.

This issue would also provide an excellent opportunity for investors to earn an attractive regular return over a period of five years at a minimal risk. These debentures are rated AA(lka) by Fitch Rating (Lanka) Ltd, unsecured, subordinated and redeemable on maturity after five years and will be listed on the Main Board of the Colombo Stock Exchange.

The five year debentures have three interest payment options to suit the investor eagerness, (Type A – Fixed Interest Rate of 16 % p.a. paid annually, Type B – Floating Interest Rate of 6 months gross treasury bill rate + 1.25 % paid bi-annually or Type C – Fixed Interest Rate of 15.25 % p.a. paid bi-annually.)

The bank has revisited the corporate strategy keeping in mid the huge potential for business development in the country, the North And East in particular, after the end of the war and are now focused on undertaking new business to move away from traditional banking business.

This debenture issue would generate additional funds for the purpose of expansion of advances portfolio of the bank which will contribute to growth of the Sri Lankan economy in turn.

In view of the requirement of investments around 35 % of the GDP by public and private sector to maintain economic growth of the country, the significance of this debenture issue, could be identified, he said.