COMBank’s Rs. 12 b debenture issue draws over Rs. 16 b demand

The Commercial Bank's Rs. 12 billion debenture issue elicited a demand worth over Rs. 16 billion.

The issue closed on its opening day, 12 December and Commercial Bank said it received 486 applications requesting for debentures worth Rs. 16.186 billion reflecting an oversubscription by 35% or over Rs. 4 billion.

The Bank offered an initial issue of 60 million Basel III compliant - Tier 2 listed rated unsecured subordinated redeemable debentures with a non-viability conversion feature, at the par value of Rs. 100 each, to raise Rs. 6 billion, with an option to issue up to another 60 million debentures to raise an additional Rs. 6 billion at the discretion of the Bank in the event of an over subscription of the initial issue.

The issue had six interest rate options. Type A is five year tenor and fixed coupon rate of 14.50% per annum (AER) of 15.03% payable semi-annually. Type B is 5 year tenor and fixed coupon rate of 15% per annum (AER 15%) payable annually. 

Type C is 7 year tenor and fixed coupon rate of 13.75% per annum (AER 14.22%) payable semi-annually. Type D is 7 year tenor and fixed coupon rate of 14.25% per annum (AER 14.25%) payable annually. Type E is 10 year tenor and fixed coupon rate of 13.50% per annum (AER 13.96%) payable semi-annually and Type F is 10 year tenor fixed coupon rate of 14% (AER 14%) payable annually.

The biggest demand in terms of value had been for the Type B debenture. It received 216 applications worth Rs.10.4 billion. In terms of applications Type A debenture got the highest - 236 requesting for 3.3 billion worth of debentures. Type F drew 10 applications requesting for Rs. 1.5 billion debentures and Type D was third highest with Rs. 830.7 million debentures from 12 applicants.

Funds raised via the debenture issue will be used to further strengthen its Tier II capital base, raise funds for the expansion of its lending portfolio, and bridge maturity mismatches in the assets and liabilities portfolio of the Bank.