MBSL completes two listed debenture issues worth Rs. 2.5 b

The investment banking division of Merchant Bank of Sri Lanka PLC, the Corporate Advisory and Capital Markets Division, is in the forefront of debenture issues and successfully completed two listed debenture issues in first quarter of 2013.

Being the pioneers in managers and registrars functions, the Corporate Advisory and Capital Markets Division raised a sum of Rs. 500,000,000 through its five-year listed debenture issue for Commercial credit and Finance PLC.

It was one of the first listed debenture issues in 2013 capitalised on the National Budget incentive, where the interest income from investments made on or after 1 January 2013 in corporate debt securities listed on the Colombo Stock Exchange will be exempt from income tax including the deduction of Withholding Tax (WHT).

In March 2013 the Corporate Advisory and Capital Markets Division raised Rs. 2 billion via listed debentures for MBSL as Managers and Registrars to the debenture issue. The issue came with an option to increase the sum up to Rs. 2 billion in the event of an over subscription of the initial Rs. 1 billion or 10 million (10,000,000) debentures. Each debenture had the value of Rs. 100 and Ram Rating (Lanka) Ltd. has assigned a long term rating of AA- to these debentures.

This debenture issue was oversubscribed on the opening date of received applications to the value of Rs. 2,088,140,000. As a result of oversubscription the Board of Directors of MBSL decided to allot the debentures on a pro-rata basis and decided to give full allotment to Type B and D and to Type A and C on a pro-rata basis (93.86%) since value of applications received for Type A and C counts to Rs. 1.436 billion and for Type B and D counts to Rs. 651 million. This will enable a fair basis of allocation considering the number of applications received for the issue.

The money raised from the issue will be utilised to raise long-term funds required for increasing the lending portfolio and for the settlement of short term borrowings of the company.