SLT’s milestone Rs. 7 b debenture issue snapped up

Sri Lanka Telecom’s milestone listed debenture issue worth Rs. 7 billion was oversubscribed on its official opening day last week.

It was the largest issuance of 10-year debentures by a corporate, and was the only AAA-rated senior unsecured debenture issue. The only previous unsecured AAA-rated corporate debenture was also by SLT. 

The latest issue offered a 12.75% per annum coupon for 10 years, and was priced lower than many bank/finance company debentures offering higher coupons for shorter tenures. The debenture issue was inclusive of a green shoe option.

Sources said another noteworthy development was the SLT debenture being oversubscribed on the opening day despite two other large debenture issues also debuting the same day. Acuity Partners Ltd. was the managers of the issue.

SLT’s debenture proceeds will be used by the issuer to retire short term debt (Rs. 5 billion) and to fund planned capital expenditure (Rs. 2 billion).

SLT offered 50 million senior, unsecured, redeemable, rated 10-year debentures of Rs. 100 each with a green shoe option to issue a further 10 million debentures and a further green shoe option to issue up to 10 million more debentures in the event of an oversubscription of each tranche. 

The Type-A debenture offers a 12.75% annually payable interest rate, and Type-B offers 12.75% semi-annually payable interest rate (AER of 13/16%). The debentures have been rated AAA by Fitch.

In the event of an oversubscription, the Board shall reserve the right to allocate up to 75% of the number of Debentures to be allotted under this prospectus on a preferential basis to identified investors of strategic and operational importance with whom the company might have mutually beneficial relationships in the future.