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PABC debentures

+3
worthiness
bullrun
gamaya
7 posters

Go down  Message [Page 1 of 1]

1PABC debentures Empty PABC debentures Mon Oct 22, 2012 8:25 pm

gamaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

PABC announced its proposed listing of debentures.
Is this a way to acquire the minimum capital requirements imposed by Central Bank?

Experts please advice...

2PABC debentures Empty Re: PABC debentures Tue Oct 23, 2012 8:34 am

bullrun

bullrun
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

gamaya wrote:PABC announced its proposed listing of debentures.
Is this a way to acquire the minimum capital requirements imposed by Central Bank?

Experts please advice...

Stock will be strong. Beta valve of the stock is also atractive. When the market start to move this will lead I suppose

3PABC debentures Empty Re: PABC debentures Tue Oct 23, 2012 9:25 am

gamaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

PABC needs to increase their capital to 4Bn by end 2013; 5Bn by end 2015 as per CBSL directive in 2010 - Sept.

My question is "Is issuance of debentures one way of acheiving this?"

4PABC debentures Empty Re: PABC debentures Tue Oct 23, 2012 9:40 am

bullrun

bullrun
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

It is possible. Debenture is one of the long term capital sources. Eventually with the accumulation of reserves they can redeem the debentures. No hum. This is acceptable method.

5PABC debentures Empty Re: PABC debentures Tue Oct 23, 2012 10:26 am

worthiness


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

As long term financing source the issuance of debenture is the common practice.
However the term period of repayment & the interest rate specified are very significant.
Also, positive cash flows accumulated during the period for repayment at the end of debenture period releases the enterprise from re-borrowing for repayment. Whatever, debenture is long term liability for any enterprise.

As Redbull indicated above, I am not much sure how the issuance of debenture supports to strength share price under the current business governance in our country.

Can any forum member/expert figure out that under well operated regulatory system (not ours) how debenture financing jack up capital market?





6PABC debentures Empty Re: PABC debentures Tue Oct 23, 2012 4:25 pm

ud


Stock Trader

If the said debenture have feature like having a 5 year tenor and a bullet repayment, this debenture will form part of the tier 2 capital of the bank (Capital Adequacy requirements). Banks have two tiers of capital where the equity and reserves will be tier 1.

Debt capital has following features,
-A prior set charge (Rate is known)
-Tax shield (interest is allowed as an expense by tax)

and unless a company have exceeded the optimum level for debt, having debt will theoretically increase returns of the equity holders. Specially a lending business (bank, finance companies) where high gearing ratios prevail will earn higher returns for the equity holder.

I am not personally supporting debt funding as there are many cons in that regardless of whether it can be proven with theory.

7PABC debentures Empty Re: PABC debentures Tue Oct 23, 2012 7:10 pm

snandasiri

snandasiri
Manager - Equity Analytics
Manager - Equity Analytics

Compare to sampath debentures PABC's rates are low.not attractive.

8PABC debentures Empty Re: PABC debentures Tue Oct 23, 2012 9:31 pm

gamaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

ud wrote:If the said debenture have feature like having a 5 year tenor and a bullet repayment, this debenture will form part of the tier 2 capital of the bank (Capital Adequacy requirements). Banks have two tiers of capital where the equity and reserves will be tier 1.

Debt capital has following features,
-A prior set charge (Rate is known)
-Tax shield (interest is allowed as an expense by tax)

and unless a company have exceeded the optimum level for debt, having debt will theoretically increase returns of the equity holders. Specially a lending business (bank, finance companies) where high gearing ratios prevail will earn higher returns for the equity holder.

I am not personally supporting debt funding as there are many cons in that regardless of whether it can be proven with theory.

Thanks for the explanation from a financial point of view,

9PABC debentures Empty Re: PABC debentures Wed Oct 24, 2012 7:38 pm

Fresher


Moderator
Moderator

http://www.cse.lk/cmt/upload_cse_announcements/5171351076475_.pdf

10PABC debentures Empty Re: PABC debentures Wed Oct 24, 2012 7:40 pm

Fresher


Moderator
Moderator

PABC debentures Captur10

11PABC debentures Empty Re: PABC debentures Wed Oct 24, 2012 8:28 pm

WildBear


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

These rates are not attractive at all, recently concluded SAMP debentures gave much higher return with better rating.

12PABC debentures Empty Re: PABC debentures Wed Oct 24, 2012 8:35 pm

Fresher


Moderator
Moderator

WildBear wrote:These rates are not attractive at all, recently concluded SAMP debentures gave much higher return with better rating.

two different scenarios.

PABC debentures were issued when the interest rates were low. I think par value is 1000/- so it should trade below that value if traded.
On the other hand Sampath recently ISSUED the debentures so it HAD TO issue with a high interest.

Please note that this is not a fresh issue but only a listing through introduction.

13PABC debentures Empty Re: PABC debentures Wed Oct 24, 2012 8:37 pm

Fresher


Moderator
Moderator

gamaya wrote:PABC announced its proposed listing of debentures.
Is this a way to acquire the minimum capital requirements imposed by Central Bank?

Experts please advice...

this will have no change in it's capital structure as they seem to have been issued in March Quarter

14PABC debentures Empty Re: PABC debentures Wed Oct 24, 2012 8:41 pm

Fresher


Moderator
Moderator

further to the above, see this

http://www.cse.lk/cmt/uploadAnnounceFiles/3041323426939_388.pdf

I remember seeing this back then but totally forgot about it. Seems that they were able to get a private placement for 750m but there was no announcement made. The only place to see this was the quarter reports.

If it is the same Japanese party, then seems as if they want to sell off fully or partly what they hold.

15PABC debentures Empty Re: PABC debentures Thu Oct 25, 2012 9:32 pm

gamaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

npp wrote:further to the above, see this

http://www.cse.lk/cmt/uploadAnnounceFiles/3041323426939_388.pdf

I remember seeing this back then but totally forgot about it. Seems that they were able to get a private placement for 750m but there was no announcement made. The only place to see this was the quarter reports.

If it is the same Japanese party, then seems as if they want to sell off fully or partly what they hold.

So this means the banks Tier 2 capital remains unchanged. Its just a listing of existing debentures for buying and selling in the market?

16PABC debentures Empty Re: PABC debentures Thu Oct 25, 2012 9:57 pm

Fresher


Moderator
Moderator

gamaya wrote:
npp wrote:further to the above, see this

http://www.cse.lk/cmt/uploadAnnounceFiles/3041323426939_388.pdf

I remember seeing this back then but totally forgot about it. Seems that they were able to get a private placement for 750m but there was no announcement made. The only place to see this was the quarter reports.

If it is the same Japanese party, then seems as if they want to sell off fully or partly what they hold.

So this means the banks Tier 2 capital remains unchanged. Its just a listing of existing debentures for buying and selling in the market?

yes. but correct me if i am wrong, but it's similar to listing of shares through introduction.
tier 2 capital may have changed when the debentures were actually issued

17PABC debentures Empty Re: PABC debentures Tue Oct 30, 2012 9:36 am

gamaya


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

npp wrote:
gamaya wrote:
npp wrote:further to the above, see this

http://www.cse.lk/cmt/uploadAnnounceFiles/3041323426939_388.pdf

I remember seeing this back then but totally forgot about it. Seems that they were able to get a private placement for 750m but there was no announcement made. The only place to see this was the quarter reports.

If it is the same Japanese party, then seems as if they want to sell off fully or partly what they hold.

So this means the banks Tier 2 capital remains unchanged. Its just a listing of existing debentures for buying and selling in the market?

yes. but correct me if i am wrong, but it's similar to listing of shares through introduction.
tier 2 capital may have changed when the debentures were actually issued

Thanks a lot for your explanation.
Looks to me also like an introduction.

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