Seylan closes debenture issue at Rs. 5 b over-subscription

Seylan Bank PLC closed its latest listed debenture issue at the Rs. 5 billion oversubscription level yesterday which was its official opening day.

The original plan was to enhance the issue to a maximum of Rs. 7 billion in the event the first goal of Rs. 5 billion is oversubscribed at the discretion of the Board of Directors.  

The Bank offered 50 million fully paid, BASEL III Compliant Tier 2 Listed Rated Unsecured Subordinated Redeemable Debentures with a Non-Viability Conversion at a par value of Rs. 100 each with an option to issue up to a further 20 million of such Debentures in the event of an oversubscription of the initial tranche at the discretion of the Bank. The tenure is five years.

The debentures are of two types. Type A offers a 28% interest rate per annum (AER of 28%) payable annually and Type B offers 25% interest rate payable quarterly (AER of 27.44%).

Seylan said yesterday that it had received applications for over Rs. 5 billion for the Debenture Issue signalling oversubscription of the initial amount.

“The Bank has taken the decision to close the issuance at Rs. 5 billion without exercising the

option to issue a further Rs. 2 billion of the said debenture,” it added.

Seylan is to announce the basis of allotment to CSE in due course.The primary objectives of the issue of the Debentures are to strengthen the Tier 2 Capital base of the Bank as per BASEL III requirements by the issue of subordinated debentures, and grow the lending portfolio, especially in segments such as Small and Medium Enterprises (SME) and Export oriented industries. It also aims to reduce the maturity gaps in the assets and liabilities of the Bank.

The latest debenture is part of Seylan Bank’s plans to raise Rs. 12 billion via multiple issues until 31 December. The size, tenure/maturity period (minimum five years), coupon rate/s, frequency of coupon/s etc., as determined by the Board will be notified prior to the opening of each issue.