Seylan Bank’s Rs. 5 b debenture issue snapped up

Seylan Bank’s Rs. 5 billion debenture issue opened on 9 April and the first tranche of Rs. 3 billion was successfully oversubscribed on the opening day, reflecting a strong investor confidence in Seylan. 

The bank kept the issue opened for one more day for the second and final tranche of Rs. 2 billion, which too was successfully oversubscribed on the same day.

The issue is ‘BBB+(lka) rated fully paid Basel III compliant Tier 2, unsecured subordinated redeemable debentures with a non-viability conversion at a par value of Rs. 100 each. The debentures will be listed on the Colombo Stock Exchange.  

The sum raised by way of the debentures strengthens the bank’s Tier 2 capital base and the proceeds will be utilised to fund the credit growth (loans and advances) of the bank. The bank recorded a Profit-after-Tax of Rs. 3.189billion for the year ended 31 December 2018. The bank’s advances grew by 16.4% while the deposit base grew by 16.4%. Net interest income increased by 14.6% while net fee and commission income from core banking activities grew by 7.0%. 

The overall deposit base recorded a growth of Rs. 50 billion from Rs. 307 billion by end of 2017 to Rs. 357 billion by 31 December 2018. The bank reported a net advance growth of Rs. 46 billion with advances growing from Rs. 281 billion to Rs. 327 billion during 2018.

Commenting on the successful execution of the debenture issue, Seylan Bank Director/CEO Kapila Ariyaratne stated: “The oversubscription of the debenture issue on the same day it opened reflects the trust and confidence of the market in the journey that Seylan Bank has made and its future growth potential. The success of this debentures will help our bank to forge ahead with its ambitious growth plans. The funds will also strengthen our Tier II capital base and assist us to achieve significant milestones we have earmarked for the near future.”

People’s Bank Investment Banking Unit and Capital Alliance Partners Ltd. were the Joint Managers to the Issue. Bank of Ceylon was appointed as the Trustees and MessrsNithya Partners as the Lawyers. SSP Corporate Services Ltd. has been appointed to function as the Registrars to the five-year debenture issue.