Commercial Bank announces debenture issue of Rs 5 bn. with option to increase to Rs 7 bn.

February, 19, 2016

The Commercial Bank of Ceylon PLC, Sri Lanka’s largest private bank by assets, market capitalisation and profit after tax, has announced plans to raise Rs 5 billion via a debenture issue with an option to increase it by a further Rs2 billion, for the growth of the Bank’s lending portfolio and to further strengthen its balance sheet.

The listed, rated, unsecured, subordinated, redeemable debenture issue opens on 29th February, but applications are now being accepted, the Bank said. More details can be obtained from the prospectus available in the website and at all stockbrokers.

The Bank will offer two types of debentures, Type A with a five year tenure and Type B with a 10 year tenure.

The five-year debentures will carry a fixed interest rate of 10.75% p.a. (AER 11.04%) payable semi-annually, while the ten-year debenture will offer a fixed interest rate of 11.25% p.a. (AER 11.57%), also payable semi-annually. The investors’ return is further enhanced by the tax concessions applicable to listed debentures.

The debentures are rated AA- (lka) by Fitch Ratings Lanka Limited (FRL). Commercial Bank’s National Long-Term Rating has been affirmed at 'AA(lka); Stable Outlook' by Fitch. The Investment Banking Division of Commercial Bank of Ceylon PLC is the Manager to the Issue.

The debenture issue will close in 14 days of its opening date unless oversubscribed before the closing date.

Commercial Bank ended 3Q 2015 with profit before tax of Rs 12.19 billion, net profit of Rs 8.426 billion, assets of Rs 872.9 billion, and capital adequacy ratios of 11.93% (Tier I) and 14.65% (Tier 1 + II), both well above the minimum statutory requirements of 5% and 10% respectively.

The only Sri Lankan bank to be ranked among the Top 1000 banks of the world for five consecutive years by ‘The Banker’magazine of the UK, Commercial Bank operates a network of 250 branches and 625 ATMs in Sri Lanka. The Bank was ranked the most valuable private sector brand in Sri Lanka in 2014 (Brand Finance/LMD) and has also won multiple awards as Sri Lanka’s best bank from a number of international publications over several years. The Bank was adjudged one of Sri Lanka’s 10 best corporate citizens by the Ceylon Chamber of Commerce in 2013 and 2014.

Commercial Bank’s overseas operations encompass Bangladesh, where the Bank operates 18 branches and Myanmar, where it has a Representative Office in Yangon. In September 2015, the Bank received regulatory approval for the establishment of a fully-fledged Tier I Bank in the Republic of Maldives. The Bank also received a license to operate a fully owned Money Transfer Operation in Italy.