With Singer, Senkadagala raising Rs. 2.5 b, debt market awaits HNB’s Rs. 2 b issue

Thursday, 23 May 2013 00:35 - - {{hitsCtrl.values.hits}}

With two of the latest debenture issues successfully snapped up on their opening day, debt market analysts expect the next in line HNB’s Rs. 2 billion issue with an option to upsize by an equal amount in the event of an oversubscription, will meet similar demand too.

The upbeat sentiment is due to the attractive interest rates offered to the debentures as well as 2013 Budget incentive for issuers and investors alike.

As the Daily FT exclusively reported on Monday, the listed debt market is heading for a record year with Rs. 10.5 billion already raised and a further Rs. 15 billion worth of issues in the pipeline, two of which concluded early this week.

On Tuesday, Rs. 1.5 billion debenture issue of Singer Sri Lanka and Rs. 1 billion of Senkadagala Finance Plc were oversubscribed on their official opening day.

Singer’s issue was 10 million three-year rated, unsecured, redeemable debentures at an issue price of Rs. 100 each with an option to issue up to a further five million debentures in the event the initial 10 million are oversubscribed. The retail giant exercised the option and raised Rs. 1.5 billion.

Given an A rating by Fitch Ratings (Lanka), the debentures were issued at a fixed interest rate of 14.50% per annum the lowest interest rate out of all debentures issued to date in 2013.

Senkadagala Finance also successfully raised Rs. 1 billion via five million rated, unsecured, redeemable debentures at Rs. 100 each with an option to issue up to a further five million debentures in the event the initial five million debentures are oversubscribed. Senkadagala too exercised the option. Its debentures were of four and three years of tenure with floating and fixed rate options. For example fixed rate on four-year instrument was 17.25% per annum and 17% on the three-year tenure.

HNB’s latest debenture issue of 20 million five-year unsecured, subordinated, redeemable debentures at Rs. 100 each with an option to issue a further 20 million in the event of initial 20 million is oversubscribed will be up for subscription from next Tuesday whilst official opening is on 6 June. The HNB debentures carry a coupon rate of 14% per annum.

In the 2013 Budget the Government exempted income tax on the interest income of corporate debt securities.