Thursday, 8 May 2014 00:00
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First primary dealer to offer repo investment option beyond one year
First Capital Treasuries Ltd. has announced the launch of a long-term, fixed-return bond, becoming the first primary dealer in Sri Lanka to launch a repo investment option backed by Government securities with maturity beyond one year.
The First Capital Treasuries Platinum Bond will offer interest of 8.5%, 10% and 11% respectively on maturities of three, four and five years on a minimum investment of Rs. 1 million, translating to annual effective rates of 7.87%, 8.78% and 9.16%, the company said.
Accordingly, investors will receive Rs. 1.255 million, Rs. 1.4 million and Rs. 1.55 million on bonds of Rs. 1 million at the end of three, four and five years respectively. The investment is backed by Sri Lanka Government securities (Treasury bills/bonds), which will make it a 100% risk free investment opportunity and the respective collaterals will be logged in a Central Depositary System (CDS) account opened under the name of the investor.
Premature withdrawals and loan facilities are also available with this product in order to facilitate any urgent cash requirements of the investor, the company said.
“We expect this new debt security to attract retail and high net worth investors as well as corporate entities that have mandatory requirements to maintain long-term investments,” said Dilshan Wirasekara, Deputy CEO of First Capital Holdings. “Because the rate of return is fixed, investors will be insulated against the volatility of interest rates, making the Platinum Bond a risk-free investment opportunity.”
He said the product is easy to understand since accruals and returns are on a straight line basis, as opposed to the yield-to-maturity model of a Treasury bond based on coupon payments and duration.
For First Capital Treasuries, the Platinum Bond represents a source of funding with minimal maturity mismatches and provides an opportunity to attract new clients and incremental business, Wirasekara added.
A fully-fledged Investment Bank, First Capital Holdings comprises First Capital Ltd., First Capital Treasuries Ltd., First Capital Markets Ltd., First Capital Asset Management Ltd. and First Capital Equities Ltd.
First Capital Treasuries is a Central Bank licensed primary dealer and is considered the pioneer in the primary dealer industry. It is also the largest non-bank primary dealer operating in the market at present.
Of the other entities, First Capital Asset Management is an SEC licensed investment manager which also manages a dedicated fixed income unit trust; First Capital Equities is a licensed stockbroker and member of the Colombo Stock Exchange; First Capital Markets is a licensed margin provider; and First Capital Ltd. is a structuring and placement agent for debt and equity, and a provider of corporate finance and advisory services.
The Board of Directors of First Capital Holdings PLC comprises Deshamanya Lalith de Mel (Chairman), Manjula Mathews (Managing Director,)Nihara Rodrigo, EardleyPerera, Minette Perera, Dinesh Schaffter and Nishan Fernando.
