Listed debt market marks record year in 2015

By Charumini de Silva

The country’s listed debt market has ended 2015 with a record fund raising of Rs. 83 billion surpassing the previous best of Rs. 68 billion achieved in 2013.

According to the Colombo Stock Exchange the highest ever corporate listed debt raising was via 22 debenture issues. This number however is lower compared to 2013’s figure of 28 issues. 

In 2014, there were 20 issues raising Rs. 54.2 billion and 2015’s haul reflects a very healthy 35% increase.

“The year 2015 has been a record breaking year for debt issues. We saw an increased demand for corporate debt issues in the market and I think this trend would continue in future as well,” CSE Chairman, Vajira Kulatilaka said.

The surge in debenture issues in 2015 was also due to the expiry of tax exemption by end of the year. 

However to further facilitate the expansion of the corporate debt securities market, Finance Minister Ravi Karunanayake in the 2016 Budget further extended this concession by waiving the income tax and withholding tax applicable to debentures.

In the 2016 Budget the Finance Minister also said the CSE does not have a trading platform for the trading of Government securities and proposed to set up a Bond Clearing House primarily for transactions in Government securities, which could then be extended to other instruments including the corporate debt securities known as debt exchanges.

CSE Chief Kulatilaka welcomed the 2016 Budget move to extend the concession. “This will have a positive impact on the corporate debt market,” he emphasised.

Noting that majority of debentures was issued by the financial sector he explained that it shows the sector was expanding at the meantime. However, he emphasised on the further broadening of the debt market in years to come. 

During the year 2015 the highest amount of debt was issued by National Development Bank PLC with Rs.10 billion, followed by Bank of Ceylon PLC with Rs.8 billion and Sampath Bank PLC with Rs.7 billion. 

The latest debenture issue was by Sanasa Development Bank PLC worth Rs.4 billion.

Of the Rs. 83 billion total funds raised by the listed debt market, NDB Investment Bank Ltd solely and jointly arranged Rs.46 billion worth issues dominating with 55% of the market share, while Bank of Ceylon PLC accounted for 14% of market share.