BOC makes history by raising US $ 1 bn within 12 months

Bank of Ceylon (BOC) has launched their second five year US$ Bond (senior notes due 2018) within a space of 12 months. The notes were priced at a yield of 5.325%. BOC had originally planned US$ 300 million size issuance but with offers for over US$ 2,000 million (effectively oversubscribing by 6.8 times) BOC decided to up-size the issue to US$ 500 million.

The offering was highly successful following an intra-day book building exercise and attracted diverse participation with over 140 investors placing orders. The offering saw strong participation from a range of high quality institutional and private banking investors, with the granular split demonstrating the wide appeal of the BOC credit.

Asian investors took 74% of allocations, with European investors accounting for the remainder.

By type, fund managers received 55% of allocation; private banks received 37%, banks received 3% and corporate/others with 8%.

The offering priced at a final coupon of 5.325%, tighter than initial guidance of 5.50% area, reflecting the quality and strength of the order book.

This transaction is in line with BOC's long-term funding strategy of diversifying its funding sources, and establishing its credit curve in the international bond markets. The sole book-runner and sole lead-manager for the offering was UBS AG, Singapore Branch.

BOC and UBS were very confident of the success of this issue and therefore, decided to launch it on a Reg. S only format excluding US onshore investors. This transaction was concluded with only one security rating, one international transaction counsel and without any road show.

The overwhelming success of this issue, once again reflects the confidence placed by the international investor community on Sri Lanka in general and BOC in particular.

When comparing the yield of 6.875% achieved on the previous note due 2017, the new issue priced at a yield that was more than 150 bps lower.

The notes are rated by Fitch Ratings at BB- which is similar to the ratings received for our previous issue.

P A Lionel, Head of International, Treasury and Investment Banking said, "This transaction marks our second issuance in the US$ bond market, and we are pleased to have captured a strong market window with this benchmark offering.

We are also encouraged by the strong response and the broad participation by both international investors and private banks."