S’pore investment bank buys UDA debentures

Wednesday, 6 October 2010 00:31 -     - {{hitsCtrl.values.hits}}

CITICORP Investment Bank Singapore has purchased the entire amount of Rs. 3 billion allocated for foreign investors in the just concluded debenture issue of Urban Development Authority.

News360.lk reported that Bank of Ceylon, the issuer to the debenture said the money came through the local branch of the CITI Bank, which in US$ terms runs up to roughly US$ 27 million.

BOC, SLPA, SLIC, the National Insurance Trust Fund, Seylan, Commercial and Sampath are the local parties who invested on this UDA debenture.

UDA raised Rs. 10 billion via this issue and have already announced the basis of allotment of debentures.

Accordingly, The Ports Authority will receive Rs. 1.7 billion worth of debentures; The National Insurance Trust Fund a sum of Rs. 1.045 billion, Bank of Ceylon and the Sri Lanka Insurance each will get Rs. 871 million.

Meanwhile, the 3 other Banks, Seylan, Sampath and the Commercial Bank, will each receive Rs. 435 million worth of debentures.

The UDA debenture will be listed on the main board of the CSE within a period of 2 weeks.

The debenture offered 3 types of investment packages.

An 11% rate will be given to annual payment of interest, a 10% rate will be given to monthly payment of interest and the bi-annual rate will be decided based on the Treasury bill rate + 0.75%.

The salient feature of this debenture is that it is given a Sri Lankan Government’s treasury guarantee.

The issue’s manager Bank of Ceylon said that resident investors who had applied for up to Rs. 10 million debentures will be allotted in full. For those applicants above Rs. 10 million will be on a pro-rata basis. Accordingly 532,300 debentures (worth Rs. 53.2 million) had been allotted to the first category and 69.4 million (worth Rs. 6.94 billion) to the second category, bringing the total allocation to resident investors to 70 million. Foreign investors have been allocated 30% or 30 million debentures. This would be on a first come first serve basis in order to avoid operational issues involved in repatriating part of the funds to non resident investors.

The issue involved 100 million (50 million as first option and a further 50 million in the event of oversubscription) fully secured, redeemable, five year debentures at Rs. 100 each.  The issue which was oversubscribed within four days of its opening drew 88 applicants requesting for 110.2 million debentures worth Rs. 11 billion. Of the 88 applicants 10% or 8 (requesting for Rs. 6.8 billion worth of debentures) had been mega scale investors judging by payments made by bank guarantees.