Bank of Ceylon launches Rs. 8 b listed debenture issue

BOC Deputy General Manager - Investment, Treasury & International S.M.S.C. Jayasuriya 

Bank of Ceylon (BOC), the banking giant in Sri Lanka and the major driving force behind the country’s economic and social development, is opening the subscription list of its rupee debenture issue – 2015 on 1 October. “Launching of this seventh listed debenture issue has been arranged while BOC retains its position as the largest debenture issuer in the country, having issued debentures with par value of Rs. 37.0 billion so far,” stated the bank’s Deputy General Manager – Investment, Treasury and International S.M.S.C. Jayasuriya.

Existence of a vibrant corporate debt market facilitates the efficient utilisation of resources in the economy, generating growth, employment and prosperity. The corporates that issue debt instruments raise funds for their business needs and expansion, alongside equity and bank borrowings. The investors are offered a range of advantages such as stable and predictable income, retention of capital value, liquidity and diversification of investments. Listed corporate debts are monitored and regulated by the Colombo Stock Exchange and the Securities and Exchange Commission of Sri Lanka and encouraged retail involvement. The sustainable economic development envisaged by Sri Lanka through export oriented production, highlights the importance of the active debt market and its pivotal role in economic growth. In this background, the debenture issue by the largest and state owned bank in Sri Lanka, Bank of Ceylon is a significant impetus for the development of Sri Lankan debt market.  

The debenture issue is for an offering of Rs. 5 billion with an option to increase it up to Rs. 8 billion in the event of an oversubscription. The Unsecured, Subordinated, Redeemable Debentures rated AA by Fitch Ratings Lanka Ltd. are to be listed on the Colombo Stock Exchange in accordance with the provisional approval obtained. The debentures have five year and eight year maturities with fixed and floating coupon rates. Fixed coupon rates range from 8.24% to 9.5% while the floating coupon rate is 1.25% over and above the gross Treasury Bill Rate. Debentures are offered at par value of Rs. 100 in five types to meet diverse investor requirements. The minimum subscription per application is Rs. 10,000 (or 100 debentures). Applications in excess of the minimum subscription shall be in multiples of Rs. 10,000 (100 debentures). Applications and prospectus containing further details of the debenture issue are now available at all trading members and members (stock brokers) of the Colombo Stock Exchange and websites www.cse.lk and www.boc.lk. 

As per existing tax regulations investments in the debentures are entitled for tax exemptions, including withholding tax on interest income and capital gains (if any in case of premature disposal)

The seventh public debenture issue of BOC is also structured by the bank’s Investment Banking Division as in the previous issues. 

Bank of Ceylon acts as the Managers, Registrars, Bankers and Lawyers to the proposed debenture issue while Deutsche Bank AG, Colombo branch is acting as the Trustee to the issue. 

The debenture issue is priced considering the high credit worthiness indicated by the issue rating of AA affirmed by Fitch Ratings Lanka Ltd., minimal risk involved in the investment and the strong franchise enjoyed by Bank of Ceylon.

The funds raised through this debenture issue will be utilised for long term lending in development projects which in turn contribute to the Economic and Social Development of Sri Lanka.

With 76 years of success, Bank of Ceylon is firmly established as Sri Lanka’s premier financial services organisation. As Bankers to the Nation, Bank of Ceylon reaches out to every Sri Lankan through its branch network of 622 all of which offer online access and 547 ATM service points. Bank of Ceylon leads in the local banking industry as the biggest in terms of profit, assets, deposits, advances and foreign currency remittances.

BOC now owns the biggest worldwide network with over 859 overseas correspondent banks and exchange companies. The bank has three overseas branches located in Chennai, Male and Seychelles and wholly owned subsidiary in London. 

Bank of Ceylon proudly received global recognition once again by being ranked among the top 1,000 banks in the world with the country ranking No.1, by the world’s premier banking and finance magazine, ‘The Banker’. The bank has ranked among the Top 5 banks in the Asia-Pacific Region (excluding China and Japan) in terms of Return on Capital (ROC) also by ‘The Banker’ Magazine becoming the first Sri Lankan bank to achieve such a performance ranking from an internationally recognised entity.  The bank claimed its award as the only Sri Lankan brand recognised as one of Asia’s Best Brands in 2013 by the Chief Marketing Officer’s Council (CMO Council) based in Mumbai, India. Brand Finance Lanka ranked Bank of Ceylon as the country’s No. 1 brand for the last seven consecutive years. The bank has passed exceptional milestones in recent years such as becoming the first to gain over Rs. 1.0 trillion assets. BOC has over 1,000 customer touch points covering all parts of Sri Lanka. Focusing on the bank’s achievement, Fitch Rating Lanka ranked the Bank of Ceylon at AA+ (lka) which is the highest rating awarded to a local commercial bank and ICRA (lk) awarded AAA rating which is the highest credit quality rating issued by ICRA Lanka.