MBSL debenture issue of Rs. 2 b tomorrow

Merchant Bank of Sri Lanka (MBSL), a subsidiary of Bank of Ceylon and the pioneer investment/merchant bank in Sri Lanka, with a 31-year of experience in the financial sector, registered finance leasing establishment under the Finance Leasing Act No 56 of 2000 (as amended) is planning to raise two billion Rupees via listed debentures.

The bank is a registered market intermediary under the categories of Margin Provider, Underwriter and Investment Manager in terms of the Securities and Exchange Commission of Sri Lanka Act No. 36 of 1987 (as amended).

The issue comes with an option to increase the sum up to two billion Rupees in the event of an over subscription of the initial one billion Rupees or ten million (10,000,000) debentures. Each having the value of Rs. 100, these debentures will provide a fixed coupon rate of 16.50% to 17.50% per annum varying from four to five years resulting in an annual effective rate of 17.25% to 17.81%.

The investors have an option to get a coupon payment monthly, quarterly and annually depend on the type of debenture they wish to invest. Ram Rating (Lanka) has assigned a Long Term Rating of AA- to these debentures.

The money raised from the issue will be utilised to raise long term funds required for increasing the lending portfolio and for the settlement of short term borrowings of the Company.

The Company announced un-audited financial results for the year ended 31 December 2012. Net interest income was Rs. 782.9 million against Rs. 790.06 million a year ago. Operating profit for the period was Rs. 104.08 million or Rs. 0.77 basic earnings per share.

During the year 2012 the Company had optimised the country’s economic benefits and it helped to increase the company’s total assets value up to Rs. 12.09 billion and it was a growth of 21.7% compared to the year 2011 Value of RS. 9.93 billion and group’s total assets increased to Ra. 22.52 billion.

It was a growth of 17.1% compared to the year 2011 Value of LKR 19.23 Billion.

Investment banking division of Merchant Bank of Sri Lanka the Corporate advisory and capital markets division is the managers and registrars to this debenture issue, being the pioneers in managers and registrars functions for listed and unlisted debentures, have carried out many successful listed and unlisted debentures in recent past.