Listed Firms in CSE Issue Debentures to Raise Big Sums Following Budget 2013 Concessions on Corporate Debt

27th March 2013, www.dailymirror.lk

Many listed entities in the Colombo Stock Exchange were seen taking advantage of the concessions offered in the Budget 2013 with regard to corporate debt, as few companies have already raised big sums this year through debenture issues with a several more to follow.

On Monday, Fitch Ratings said Lion Brewery, a unit of Carson group and Softlogic Holdings were planning to Rs.3 billion and Rs.750 million respectively through debenture issues. The two issues have been assigned AA- and A-, respectively, by Fitch.

The Budget 2013 proposed to exempt withholding tax on interest income earned by investing in bonds and debentures listed in the Colombo Stock Exchange (CSE) with effect from this year in an attempt to create a more vibrant corporate debt market.

Being the first to take advantage of the new development, Seylan Bank PLC finished raising Rs.2 billion via a debenture issue in February that was oversubscribed in the opening day itself.

Merchant Bank of Sri Lanka, a unit of state owned banking giant, Bank of Ceylon also raised Rs.2 billion through a listed debenture.

According to analysts, companies seem to be using this window of opportunity to raise long-term capital, as the tax concessions offered in the Budget 2013 are applicable for the entire duration of the debt.

“So they can lock the moneys raised and keep it for future needs,” an analyst pointed out.

“It is encouraging to note that better managed companies are using the capital markets to raise debt on the strength of their own balance sheet.

This will reduce exposure to bank borrowings and raise medium to long-term capital, reducing interest rate risk. We hope more companies will take advantage of the tax break to issue rated longterm paper,” Fitch Rating Lanka said, responding to a Mirror Business inquiry.

According to market sources, a number of companies, including couple of big banks and several finance companies are also bracing to raise money via debenture issues in the near future.

Meanwhile Mirror Business learns that Colombo Stock Exchange is currently in the process of amending certain Listing Rules pertaining to the listing of debentures both in the main and the secondary boards.

CITICORP Singapore Buys Entire Allocation for Foreigners in UDA Debentures

05th October 2010, www.news360.lk, By Prasanna C. Rodrigo

CITICORP Investment Bank Singapore limited of Singapore has purchased the entire amount of Rs. 3 billion allocated for foreign investors in the just concluded debenture issue of Sri Lanka’s Urban Development Authority.

Bank of Ceylon the issuer to the debenture said the money came through the local branch of the CITI Bank, which in US$ terms runs up to roughly US$ 27 million.

The Ports Authority, Bank of Ceylon, Sri Lanka Insurance Corporation, the National Insurance Trust Fund, Seylan Bank, Commercial Bank and Sampath Bank are the local parties who invested on this UDA debenture.

UDA raised Rs. 10 billion via this issue and have already announced the basis of allotment of debentures.

Accordingly, The Ports Authority will receive Rs. 1.7 billion worth of debentures; The National Insurance Trust Fund a sum of Rs. 1.045 billion, Bank of Ceylon and the Sri Lanka Insurance each will get Rs. 871 million.

Meanwhile, the 3 other Banks, Seylan, Sampath and the Commercial Bank respectively will receive Rs. 435 million worth of debentures, each.

The UDA debenture will be listed on the main board of the CSE within a period of 2 weeks.

The debenture offered 3 types of investment packages.

A 11% rate will be given to annual payment of interest, a 10% rate will be given to monthly payment of interest and the bi-annual rate will be decided based on the Treasury bill rate + 0.75%.

The salient feature of this debenture is, it is given a Sri Lankan Government’s treasury guarantee.

Related Info:
Sri Lanka UDA Debenture Issue Closes after Rs11bn Bids

Sri Lanka UDA Debenture Issue Closes after Rs11bn Bids

28th September 2010, www.island.lk

The UDA’s Rs. 5 billion debenture issue to raise funds for the resettlement of 65,000 families living in unauthorised constructions in Colombo was oversubscribed yesterday with managers to the issue state banking giant Bank of Ceylon deciding to close subscription after bids applications amounting to almost Rs. 11 billion were received. The bid was open until subscriptions amounting to Rs. 10 were received.

Bank of Ceylon Chairman Dr. Gamini Wickremasinghe told The Island Financial Review that the issue was closed four days from opening after strong investor demand.

"Thirty percent of the issue was open to foreigners while local investors too showed a lot of interest with many of them coming in at the final stages. We could not accept their applications because by late afternoon we had decided to close the issue," he said.

Dr. Wickremasinghe said that local investors would get a good deal by investing in the five year debentures, as deposit interest rates, already low, could come down further during the months ahead.

Investors had three investment options: the first pays a gross return of 11 percent with interest paid annually, the second option pays a gross return of 10 percent with monthly interest payments while the third option has a floating rate of interest at the Treasury bill rate + 0.75 percent with interest paid bimonthly.

"These five year debentures would be better than fixed deposits and benefit those who rely on monthly interest income," Dr. Wickremasinghe said.

Bank of Ceylon Deputy General Manager P. A. Lionel told The Island Financial Review that applications had amounted to Rs. 9.4 billion last morning (28) after totalling 8.2 billion the previous day (27).

The UDA would use the funds to build housing units for 65,000 families within the next three and half years. The land, freed from this exercise, would be leased out for commercial and development activities.

Related Info:
Sri Lanka's UDA Debentures Open on Sept 23. 30% of Rs 10bn 5yr Bond Open to Foreign Investors

Sri Lanka Urban Bond Raises Rs4.6bn at Opening. 30pct of the Rs 10bn Issue Open to Foreign Investors

24th September 2010, www.lankabusinessonline.com

A five-year bond issued by Sri Lanka's Urban Development Authority (UDA), a state agency, to raise 10 billion rupees which opened Thursday has drawn 4.6 billion rupees, a stock exchange filing said.

The UDA is issuing 50 million debentures at 100 rupees each, to be doubled if oversubscribed, to raise cash to resettle squatters occupying prime property in Colombo city owned by government and to free land for private sector commercial development.

The stock exchange filing by state-run Bank of Ceylon, which is managing the issue, said a total of 37 applications for 46,255,900 debentures had been received so far.

The bonds are to be listed on the main board of the Colombo Stock Exchange.

Officials have said 30 percent of the issue is open to foreign investors.

The money raised will be used to build alternative homes for unauthorized dwellers in 800 acres of high value state land in Colombo city.

Investors could chose between three interest options: 11.0 percent annual, 10 percent monthly or a floating rate of Treasury bill plus 75 basis points every six months.

The UDA said it would be able to build around 20,000 houses if 5.0 billion rupees was raised and around 65,000 if 10,000 billion rupees was raised.

P A Lionel, head of investment banking at Bank of Ceylon has said commitments for over 5.0 billion rupees had already been received before the issue opened and they were open to offers for 10 billion rupees.

Related Info:
Sri Lanka's UDA Debentures Open on Sept 23. 30% of Rs 10bn 5yr Bond Open to Foreign Investors

Sri Lanka's UDA Debentures Open on Sept 23. 30% of Rs 10bn 5yr Bond Open to Foreign Investors

19th September 2010, www.dailynews.lk, By Harshini Perera

The UDA debenture issue will be open to the public on September 23. It will close after 14 days of the opening date.

Depending on the present demand, it is expected to close before 14 days, Bank of Ceylon, Investment Deputy General Manager P A Lionel told Daily News Business. The prospectus for the UDA debenture is available at the Colombo Stock Exchange (CSE) website.

The printed version will be available to the public from September 20.The self-financing UDA debenture issue will be utilised to construct low-income housing schemes for unauthorized dwellers in the Colombo metropolitan city limit.

Under this initiative, a revolving housing project of 65,000 units will be constructed. It will enable the Government to use 800 acres of valuable land for commercial purposes in the Colombo metropolitan area.

These lands are now occupied by unauthorized persons.

Related Info:
Sri Lanka's UDA Launched 5yr Bond to Raise Rs 10bn. 30pct Open to Foreign Investors

Sri Lanka's UDA Debentures Draws Over Rs 5bn

14th September 2010, www.dailynews.lk, By Harshini Perera

The Urban Development Authority’s (UDA) debenture issue which opened yesterday will be listed in the main board of the Colombo Stock Exchange (CSE). This will be done soon after the debenture issue closure is announced.

This will be a self-financing debenture issue which will be utiised to construct a low-income housing scheme for shanty dwellers in the Colombo metropolitan city limit.

Under this revolving housing project 65,000 units will be constructed and it will enable the Government to use 800 acres of valuable land for commercial purposes in the Colombo metropolitan area. These lands have unauthorized constructions.

There has been over Rs five billion commitment from individuals and institutions so far for the debenture. Bank of Ceylon as the managing body of the debenture needs to distribute it among every party representing society, Bank of Ceylon Investment Deputy General Manager, P.A. Lionel told Daily News Business.

The listing at the CSE will enable investors to liquidise their debenture before five years. It will also improve capital market transactions. “We will not be targeting investors from Colombo but from areas outside Colombo. We have issued applications to the prospectus and once we receive them back, we will allocate debenture shares.

“We have received the CSE approval and the day debenture closes it will be opened for stock market transactions,” Lionel said.

The debenture issue has already received a good response from the public and private sector investors and expects to exceed the limit of Rs five billion, Urban Development Authority Deputy Director General Wasantha Geeganage told Daily News Business.

The debenture is expected to oversubscribe and will increase to Rs ten billion if it is oversubscribed within 14 days. The issue was opened yesterday for Rs five billion and if it reaches the expected Rs 10 billion limit, it will be closed before 14 days.

Depending on the high interest rates it offers and the Government security, Colombo Stock Exchange can expect a high demand for UDA debenture which will be listed in a few days.

There will be many institutional investors involved in the investments, Asia Securities, CEO, Dihan Dedigama told Daily News Business.

Sri Lanka's UDA to Issue Rs 5bn Debentures to Develop Colombo Land

12th August 2010, www.island.lk, By Zacki Jabbar

Media Minister Keheliya Rambukwalle addressing yesterday’s cabinet press briefing in Colombo said that the cabinet of ministers on a proposal by the Defence Ministry had approved the issue of the debentures by the UDA.

Acccording to a survey conducted, 66,000 low income families were occupying valuable land in Colombo and its environs in a very "haphazard" manner, he said.

Rambukwalle said that the Urban Development Authority has formulated a project proposal to develop valuable lands in Colombo in stages and it has become necessary to relocate unauthorized settlements.

The project, once fully implemented, would especially benefit low income families, he claimed.

Rambukwalle said that the Cabinet also approved another Memorandum by President Mahinda Rajapaksa in his capacity as Highways Minister, to construct a Highway Secretariat at Denzil Kobbekaduwa Mawatha, Battaramulla, with Asian Development Bank assistance.

The entire cost of the project will be Rs. 132 million, he said.