Commercial Credit’s Rs. 2 b debenture issue snapped up

Commercial Credit and Finance PLC’s Rs. 2 billion debenture issue was oversubscribed yesterday, on its official opening day itself. 

The offer was 10 million rated, subordinated, guaranteed, redeemable five-year debentures at a par value of Rs. 100, each with an option to issue further two tranches of 5 million debentures each in the event of an oversubscription.

The Company yesterday disclosed that it has received applications for over Rs. 2 billion for the debenture issue via a CSE filing. Sole managers to the issue was Acuity Partners Ltd.

Type A debenture is a five-year tenor and carries a fixed rate of 10.40% semi annually with an annual effective rate (AER) of 10.92% on the principal sum quarterly each year. Type B is five years and carries an interest rate of a 6 months gross Treasury bill rate plus a rate of 1.50% payable semi annually.

The issue was guaranteed by Hatton National Bank PLC and Sampath Bank PLC.

ICRA Lanka assigned rating of [SL] A+ (SO) Rating with Stable Outlook to the debentures.

The issue is set to further reinforce the Company’s Tier II capital base; the funds will be utilised to further strengthen the asset base and the interest rate risk by reducing the maturity mismatch of assets and liabilities. The Company has obtained the CBSL approval to include the value of the Subordinated

Debentures issued under this Prospectus in Tier II capital base.

The Company previously issued Rs. 1 billion worth of subordinate debentures in May 2015 with the intention of increasing the Tier II capital and to increase the lending portfolio. According to company’s prospectus the objectives of the previous Debenture Issue were successfully achieved.