DFCC reflects on opening day-oversubscription of first-ever Rs. 2.5 b Green Bond issuance

• Says achievement a significant milestone for financial sector 
• Powerful validation of confidence investors have in DFCC Bank’s sustainability strategy

DFCC Bank said this week the opening-day oversubscription of its Green Bond issue, first of its kind in Sri Lanka, was a significant milestone for the country’s financial sector and underscored the Bank’s unwavering commitment to sustainability. 

The Issue represents a substantial boost for the nation’s solar energy sector, as the proceeds are earmarked exclusively for renewable (solar) energy projects that generate significant environmental benefits. DFCC Bank’s Green Bonds will soon be listed on the Colombo Stock Exchange (CSE) and traded publicly. 

DFCC Bank Director/CEO Thimal Perera said: “The overwhelmingly positive response to our Green Bond issue is a powerful validation of the confidence that investors have in DFCC Bank’s sustainability strategy and our vision for green finance. Being heavily oversubscribed on the opening day, we have set a new benchmark for the Sri Lankan financial sector and taken a decisive step in fostering the growth of renewable energy in the country. This achievement reaffirms our vision of a greener future and our commitment to driving sustainable economic growth. We take this opportunity to thank our investors and all those who supported us in this achievement.”

The bonds are classed as Type A, with a tenure of 03 years and a fixed interest rate of 12.00% per annum, with annual interest payouts and a bullet capital repayment at the end of the bond’s tenure. The Green Bond Issue also aligns with DFCC Bank’s Green Bond Framework, developed in collaboration with the Asian Development Bank (ADB), adhering to the International Capital Markets Association (ICMA) Green Bond Principles. Accordingly, the Issue raised the full Rs. 2.5 billion it sought through an initial issue of Rs. 2 billion and an option to raise an additional Rs. 500 million if oversubscribed. The offer price per bond was Rs. 100, and the minimum subscription requirement was set at 100 bonds or Rs. 10,000 or multiples thereof. 

DFCC Bank’s Green Bond Issue received substantial interest from investors, with Ceylinco Life Insurance Ltd. acting as the anchor investor. Acuity Partners Ltd. and Capital Alliance Partners Ltd. key players in Sri Lanka’s capital markets, played crucial roles as joint managers and financial advisers, sharing their expertise and experience in the corporate debt market. Meanwhile, the Trustee to the Issue was People’s Bank, while SSP Corporate Services Private Ltd. served as Registrar to the Issue, alongside KPMG as the Independent External Reviewer and Nithya Partners as the Lawyers to the Issue. Additionally, the bonds have received, from Fitch Ratings (Lanka) Ltd., an Instrument Rating of A- (lka), further backed by DFCC Bank’s Issuer Rating of A- (lka)/Stable. 

Being the first of their kind in Sri Lanka, the Colombo Stock Exchange has specially facilitated the trading of these Green Bonds. These bonds are classified as “innovative financial instruments where the proceeds are invested exclusively in green projects that generate climate or other environmental benefits, for example, in renewable energy, energy efficiency, sustainable waste management, sustainable land use (forestry and agriculture), biodiversity, clean transportation and clean water.” This unique feature of the bonds aligns with DFCC Bank’s commitment to sustainability. Meanwhile, the bonds will be traded and settled in a manner identical to conventional bonds to ensure consistency and convenience for investors.