MBSL debentures get CSE listing today

Merchant Bank of Sri Lanka PLC’s (MBSL) latest debenture issue is to be listed on the Debt Securities Main Board of the CSE on 9 April. The listing follows MBSL’s successful raising of Rs. 2 billion via the issuance of unsecured redeemable debentures for the purpose, in order to raise the long-term funds required for increasing its lending portfolio and for the settlement of the company’s short term borrowings. The debenture issue was oversubscribed on its 20 March 2013 opening date.

The debentures will provide a coupon rate of 16.50% to 17.50% per annum varying from between four to five years, resulting in an annual effective rate of 17.25%. to 17.81%. Investor’s choice of monthly, quarterly and annual coupon payments will depend on the type of debenture invested in. Ram Rating (Lanka) Ltd., has assigned a long term rating of AA- for the debentures.

MBSL has allotted 6,251,100 debentures for category A, 4,852,400 debentures for category B and 7,231,900 and 1,664,600 debentures for category C and D respectively. The MBSL27/03/18A17.5 debentures will carry a fixed rate of 17.5% and the MBSL27/03/17B17.25 debentures will carry a fixed rate of 17.25% with coupon payments payable annually, whilst the MBSL27/03/18C16.7 debentures carry a fixed rate of 16.7% and MBSL27/03/18D16.5 debentures will carry a fixed rate of 16.5%, with coupon payments payable quarterly and monthly respectively.

Considering the current declining interest rate scenario, in addition to future predictions on interest rate trends and given the fact that interest earned from these debentures are exempted from withholding tax and income tax, the MBSL debenture issue is considered an ideal investment for fixed-income securities investors.

The company’s investment banking arm, the Corporate Advisory and Capital Markets Division, being the pioneers in investment banking functions for listed and unlisted debentures, will act as managers and registrars for the issue. The division has already carried out numerous successful listed and unlisted debentures issues in the recent past; raising a sum of Rs. 500 million in mid-February 2013 through a five-year listed debenture issue for Commercial Credit and Finance PLC, listed on the Debt Securities Second Board of the CSE on 6 March. The company also previously raised a sum of Rs. 1 billion through an unlisted debenture issue for Alliance Finance Company PLC.