Seylan Bank was to issue 10,000,000 unsecured, subordinated, redeemable 5 year Debentures of Rs. 100 to raise Rs. 1 billion, and, in the event of over subscription, to issue a further Rs. 1 billion, taking the total issue to Rs. 2 billion. The initial Issue size and the option to increase the Issue were both exercised (Rs. 2 Billion) and the Issue over-subscribed within a few hours of opening.
This Debenture Issue was one of the first issues to take advantage of the 2013 Budget tax concession, where listed Corporate Debt Securities (debentures) issued after 01/01/2013 will be exempted from WHT and Income Tax.
The Seylan Bank Debenture Issue consisted of 3 types of debentures, where a ‘fixed interest rate’ will paid either annually, semi-annually or monthly. The instrument where interest is paid annually will yield a interest rate of 15.50%, while the instrument where interest is serviced semi-annually will be at a interest rate of 15.00% (AER – 15.56%) and the monthly interest serviced instrument will be at a interest rate of 14.50% (AER 15.50%).
This Debenture Issue will assist Seylan Bank to expand its capital base in order to maintain a healthy capital adequacy ratio in anticipation of ambitious credit growth targets. It will also assist to broad base the Tier – 2 capital base of the Bank. Furthermore the Issue will also assist to increase the medium term funding base to match the medium term lending of the Bank, while providing investors with an opportunity to earn a regular fixed income over the next five years.