BOC leads historical breakthrough in Sri Lanka’s financial markets

Bank of Ceylon’s inaugural Basel III–compliant Tier II Listed Sustainability Bond issue, the largest sustainability bond issuance ever undertaken in Sri Lanka, was oversubscribed and closed on the opening day, 22 December. The issue was the maiden sustainability bond launched by a state-owned bank.

BOC Chairman Kavinda de Zoysa said: “With a legacy of trust and a vision for the future, BOC is a nation-building institution, committed to powering Sri Lanka’s path toward economic revival, self-sufficiency, and global competitiveness. This landmark issuance, the largest sustainability bond issuance in Sri Lanka’s financial market to date, represents a transformative chapter in BOC’s history. We are deeply grateful for the enthusiastic participation of our investors in our sustainability journey to support a stronger and more resilient nation.”

The successful issuance comes at a time when sustainable finance has assumed growing importance in economic recovery strategies worldwide. Across both developing and advanced economies, sustainability bonds have become a key channel for directing long-term capital toward productive investment amid tighter fiscal conditions, rising climate risks, and the need to restore growth. For Sri Lanka, rebuilding after a severe economic crisis and repeated climate disruptions, this form of financing carries particular relevance.

Global issuance of green, social, and sustainability bonds has expanded steadily over the past decade. Data from the Climate Bonds Initiative show that annual labelled Bond issuance has exceeded one trillion dollars in recent years, reflecting strong investor appetite for instruments linked to environmental resilience and social development.

Acting General Manager/Chief Executive Officer Y.A. Jayathilaka said: “This issuance is a significant milestone for BOC, as it was structured entirely in-house. Our Sustainable Finance Framework was developed by the Sustainable Banking Division while the issuance was structured by the Investment Banking Division with support from the Legal Division. The Colombo Stock Exchange (CSE) provided valuable guidance throughout the process and facilitated engagement with the Asian Development Bank (ADB) who extended technical assistance in developing the Sustainable Finance Framework, in addition to supporting the listing process. KPMG served as the Independent External Reviewer and People’s Bank acted as the Trustee to the Issue. The bonds were rated ‘AA-’ (Stable) by Lanka Rating Agency Ltd. We extend our sincere appreciation to all stakeholders who partnered with us in advancing BOC’s sustainability journey.”

Sri Lanka’s recent economic crisis significantly reduced public investment capacity and constrained private sector activity. Fiscal consolidation remains a priority, limiting the scope for large-scale state-led spending. At the same time, climate vulnerability has intensified. Extreme weather events, including Cyclone Ditwah, disrupted agriculture, damaged infrastructure, and affected livelihoods, particularly in rural and flood-prone areas. Recovery therefore requires financing that strengthens resilience while supporting growth.

In this context, sustainability bonds offer a targeted financing channel aligned with national development priorities. Proceeds from the bank’s issuance will be allocated to clearly defined environmental and social projects under its Sustainable Finance Framework, supported by ongoing reporting and independent review. This structure enhances transparency and ensures that funds are directed toward long-term development outcomes.

Issued in alignment with international principles and Sri Lanka’s Green Finance Taxonomy, the bond is designed to expand lending to eligible green and social projects across the economy. These include renewable energy, energy efficiency, sustainable water and waste management, as well as social sectors such as agriculture, MSME financing, healthcare, education, and basic infrastructure.

Deputy General Manager – International, Treasury and Investment G.A. Jayashantha, who led the execution of the strategy said: “BOC is a Corporate Finance Advisor licensed by the Securities and Exchange Commission of Sri Lanka. This Sustainability Bond issuance was exclusively structured and managed by our investment banking team who possess a wealth of expertise in structuring innovative capital market instruments. We have structured Tier I as well as Tier II capital instruments for the Bank and have raised capital in excess of Rs. 120 billion. Proceeds raised from this Basel III compliant Sustainability Bond will further strengthen the Tier 2 capital of the bank. This was the second debt issue structured by our team this year as we successfully raised Rs. 15 billion. by issuing a Basel III listed debenture in May 2025.”

The issuance builds on a period of strong financial performance by the Bank. BOC recorded a profit before tax of Rs. 106.9 billion in 2024 and Rs. 87.7 billion during the first nine months of 2025. The bank was ranked as the leading Sri Lankan bank among the Top 1000 World Banks by The Banker magazine in 2025 as well, published by the Financial Times Group. It was also named The Most Valuable Brand in Sri Lanka by Brand Finance Lanka, with a brand value of Rs. 57.4 billion.

Fitch Ratings has affirmed the Bank’s National Long-Term Rating at ‘AA-(lka)’ and its Long-Term Foreign and Local Currency Issuer Default Ratings at ‘CCC+’.

The bank’s Investment Banking Division offers a comprehensive suite of services that extend beyond traditional banking, including financial advisory for listed and unlisted debt issues such as debentures, perpetual Bonds, green, social, and Sustainability Bonds, as well as securitisations, corporate restructuring, and equity transactions.

Over the years, the Investment Banking Division has raised more than Rs. 120 billion through listed and unlisted debt instruments for the Bank. The Division also provides underwriting services for initial public offerings (IPOs) and supports financing for large infrastructure and development projects. 

Bank of Ceylon is a Professional Clearing Member of the Colombo Stock Exchange (CSE) and provides trustee and custodian services for unit trust funds and corporate clients, with funds exceeding Rs. 500 billion.

BOC is an Investment Manager licensed by the Securities and Exchange Commission of Sri Lanka and the Division operates a dedicated business unit for wealth management clients.