HSBC Arranges $100mn Export Credit from Belgium to Etisalat to Expand Network with Equipment from Alcatel Lucent

0th April 2013, www.lankabusinessonline.com

HSBC said it had arranged a 100 million US dollar export credit from Belgium for Etisalat Sri Lanka to expand its network with equipment made by Alcatel-Lucent.

"The strong partnership with HSBC, ONDD and Alcatel-Lucent will now enable us to offer the best in technology and services to our customers."

He said Etisalat became the first operator to launch DC HSPA+ technology, to boost mobile broadband service in Sri Lanka.

The bank said it was the largest such deal so far in the country.

"Etisalat is a considerable force in the telecommunication industry in Sri Lanka, and we are pleased to have led this transaction to support their expansion plans..." Nick Nicolaou, chief executive officer HSBC Sri Lanka and Maldives said.

HSBC was sole arranger, sole lender and facility agent for the facility from ONDD, the export credit agency of Belgium.

HSBC had also arranged an additional 25 million US dollar facility in parallel to the export credit.

"Etisalat strongly believes in the growth potential of Sri Lanka and we want to support the ongoing development by providing the latest in technology to the country," chief executive officer Dumindra Ratnayaka, said.

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People's Leasing to Raise $ 100mn Club Loan from a Mid East Investor. Sri Lanka's Largest Non Bank Financial Institution will be the First to Raise $ 10mn following Budget Incentives for Corporate Overseas Borrowings

04th April 2013, www.dailynews.lk, By Indunil Hewage

Sri Lanka's largest Non- Bank Financial Institution, People's Leasing and Finance PLC is planning to raise $ 100 million club loan, from an investor in the Middle East.

In an interview with Daily News Business, People's Leasing and Finance PLC CEO /General Manager, D. P. Kumarage said, "we are currently negotiating with the relevant party to raise $ 100 million club loan to finance the company's future working capital requirements and a leading Middle Eastern bank is arranging the deal. We have already got the necessary approvals and confident that we will be able to conclude the transaction by late May."

People's Leasing and Finance will also be the first company in the country to raise $ 10 million following last year budget provided incentives for corporates to raise overseas funding. The Budget allows corporate entities to borrow upto $ 10 million per annum.

The local companies with good ratings are allowed to borrow from international markets; those investments are exempted from withholding and income tax. These initiatives will improve debt market where we will be a direct beneficiary," Kumarage said.

People's Leasing and Finance is aggressively looking for new business opportunities both home and abroad, particularly in Vietnam, Myanmar and Indonesia.

Consequent to the Finance Business license approval, Peoples Leasing and Finance PLC merged with its subsidiary Peoples Finance PLC by April 2013 and also concluded one of the biggest debt market deals; Rs. 6 billion worth of debenture recently.

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DFCC Raises $ 45mn Syndicated Loan. Amount Doubled due to Strong Interest Shown by Middle Eastern & Asian Banks

01st April 2013, www.island.lk

DFCC Bank has successfully concluded its debut international loan syndication for US$ 45 million. The deal which was initially US$ 25 million was increased given the strong interest shown by a large number of Middle Eastern and Asian Banks. The transaction was facilitated by HSBC who acted as the lead arranger and book runner.

"DFCC’s success in this debut international loan syndication is a testament of our unique position in the local banking industry and demonstrates the strong level of confidence placed in the Bank and on the positive growth outlook for the country by international investors" said Nihal Fonseka, Chief Executive, DFCC Bank.

"The facility drew strong international support and allows DFCC Bank to tap new investors and funding partners. The success of this transaction also strengthens DFCC’s credit story and its acceptance among a wide network of international investors for its future transactions," statement issued by HSBC said.

"The success of this debut international loan syndication underlines HSBC’s approach to maintaining strong and lasting relationships with our core banks, and the ability in closing large financial deals," said Chamira Wijetilleke, Head of Corporate Banking HSBC.

DFCC Bank ranks among the country’s leading banks with sustained profits and consistent growth. Set up in 1955, the Bank has pioneered many innovations in Sri Lanka’s financial sector and has been the financier of many trail blazing Lankan entrepreneurs. Today the DFCC Group’s total assets exceed LKR 130 billion (USD 1 billion). DFCC Bank and its almost wholly owned commercial banking subsidiary DFCC Vardhana Bank together, functions as an integrated entity in the financial services sector offering the full range of business and personal banking services seamlessly through a unified distribution channel.

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China Grants $278mn Loan for Matara Kataragama Railway Extension Project

05th March 2012, www.island.lk

The Chinese government has approved a loan of US$ 278.2 million through its Export–Import (Exim) Bank on concessional terms to finance the construction of Matara – Beliatta Section (Phase I) of Matara - Kataragama Railway Extension Project, the ministry of Finance and Planning announced yesterday.

"The Matara – Beliatta Section consists of construction of 26.75 km long single line broad gauge rail track including construction of structures such as culverts, bridges over rivers, viaducts those required over the Nilwala river flood plain, level crossings, underpass boxes, road diversion, 4 numbers of railway stations and functional requirements including construction of railway quarters for staff, earth embankments, cut embankments and ground treatment etc," the Treasury said in statement.

"This is the first Phase of the Matara - Kataragama Railway Extension Project. It is expected to construct the railway line from Beliatta to Hambantota and Hambantota to Kataragama under Phase II and Phase III respectively.

"The construction of the new railway will provide an efficient and environmentally friendly mode of transport to cater increasing demand for transport due to developments in Southern region with the operation of new port and airport at Hambantota.".

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Sri Lanka's Sampath Bank Syndicated Loan of $ 62.5mn Raised from Middle Eastern Investors

01st March 2012, www.lankabusinessonline.com

Sri Lanka's Sampath Bank has raised 62.5 million US dollars from a syndicated loan among Middle Eastern investors which will help the bank grow its assets 23 percent in 2012, officials said.

Managing director Aravinda Perera said the bank was seeking 30 million dollars but the loan was oversubscribed to close at 62.5 million US dollars.

Ravin Basnayake, country head Citibank Colombo, a lead arranger of the deal, said the oversubscription indicates the confidence of investors in the bank.

Bank Muscat S.A.O.G, Citigroup Global Markets Asia Ltd, Emirates NBD Bank PJSC, Bank Sohar S.A.O.G had loaned 10 million dollars each and United Bank Limited 7.5 million US dollars.

Union National Bank PJSC, BMI Bank B.S.C (C.) and Bank Alfalah Ltd had contributed 5 million dollars each.

The bank said its advances grew 35 percent or 43.5 billion rupees in 2011. In 2012 the bank is targeting loan growth of 23 percent.

Sri Lanka's central bank has set a limit of 18 percent for loan growth in 2011 from domestic resources, and 23 percent with additional funding from abroad.

The floating rate one-year loan priced at an undisclosed premium over the six month London Inernbank offered rate an official said.

The proceeds would be loaned in rupees, with the foreign exchange cover provided by the Central Bank.

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Sri Lanka Allows Local Firms to Borrow Abroad for Working Capital, Investment, Restructuring or Settling Foreign Loans

07th April 2011, www.lankabusinessonline.com

Sri Lanka's central bank has begun allowing companies to borrow abroad, calling for applications from firms for loans up to 20 million US dollars.

Companies can borrow for working capital, investment, restructuring or to settle existing foreign currency loans, central bank officials said.

Borrowing costs, including interest rates, should not exceed the prevailing Sri Lanka International Sovereign Bond rate in the secondary market plus 200 basis points, according to a central bank advertisement in local media.

The repayment period shall be at least three years from the date of the final loan disbursement.

Three categories of companies are eligible to borrow abroad with one consisting of firms which have to repay loans out of their own foreign exchange earnings.

These include merchandise exporters registered with the Export Development Board, and firms in tourism and tourist entertainment centres, shipping and domestic air travel.

In the other two categories, companies and sole proprietorships which do not have to have foreign exchange earnings can borrow abroad and will have to repay loans by converting rupee earnings, central bank officials said.

These include firms in agriculture, plantations, fisheries, food processing, education, power generation, research and development, health care, construction of housing and roads, mass transportation, environmental protection, vehicle assembly, port services, information technology and manufacturing.

Sole proprietorships include those in consultancy services, handicrafts, advertising, publishing, sports services, fashion and film, and entertainment industry.

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Sri Lanka’s Bank of Ceylon Raises $175mn Syndicated Loan from Middle East & Asian Banks

08th April 2011, www.news360.lk

Sri Lanka’s Bank of Ceylon has raised US$ 175 million via a syndicated loan to finance its short term funding requirements and also for trade finance related needs.

The loan which was raised in the international market has been arranged by Mashreqbank PSC of Dubai.

Fifteen banks, predominantly coming from Gulf Corporation Council and Asia have subscribed to this issue.

Bank of Ceylon says, initially the plan was only to raise US$ 100 million, but it was increased to US$ 175 million owing to the huge demand from the buyers.

The state Bank issuing a statement said, “This is the first instance in which a Middle East based International Bank arranged a syndicated loan facility for Bank of Ceylon”.

Mashreqbank is one of the leading financial institutions in the United Arab Emirates and is listed in the Dubai Stock Exchange BOC says it was also able to tap a whole set of new investors through this syndication loan.

The loan agreement with the relevant banks has been signed yesterday at the Bank of Ceylon premises.

Foreign Loans for Local Entrepreneurs in Sri Lanka. Procedure for Granting Permission Introduced

07th April 2011, www.cbsl.gov.lk

The Exchange Control Department of the Central Bank of Sri Lanka has introduced a new procedure for granting permission to obtain loans from foreign sources for projects which contribute to the economic development in Sri Lanka.

WHO WILL BE ELIGIBLE TO BORROW?
1st Category
Companies engaged in the following businesses will be considered for granting permission subject to the condition that repayments should be made out of foreign exchange earnings of the company.
• Merchandise exporters registered with the Export Development Board
• Tourism
• Tourists Entertainment Centres
• Gem and Jewellery
• Shipping
• Domestic Air Travel

2nd Category
Companies engaged in the following businesses will be considered for granting permission irrespective of the capacity to repay the loans out of foreign exchange earnings of the company.
• Agriculture, Livestock and Plantation
• Fisheries
• Food Processing
• Education and Training
• Power Generation and Transmission
• Research and Development
• Hospitals and Provision of Health and Health Care Services
• Commercial Housing Construction
• Construction of Roads and Bridges
• Mass Transportation
• Environmental Protection
• Departmental Stores
• Vehicle Assembling
• Ports & Ancillary Services
• Industrial Parks
• Urban Infrastructure (water supply, sanitation and sewage projects)
• IT Service Providers
• Heavy Industries and Manufacturing

3rd Category
Sole proprietorships in the following businesses will be considered for granting permission irrespective of capacity to repay the loans out of foreign exchange earnings of the proprietorship.
• Consultancy Services
• Handicrafts manufacturers registered with the Government Authorities
• Advertising, Publishing, Photography
• Services related to sports
• Fashion Modeling and Film Industry
• Entertainment Industry (Music, Dancing, Event Management etc.)

WHO WILL BE ELIGIBLE TO LEND?
• International Banks or Financial Institutions
• Multilateral Financial Institutions
• Foreign shareholders or parent companies of the borrowing companies
• Export credit agencies
• Individual lenders: subject to furnishing of a confirmation from the banker of his/her country of residence that he/she had been maintaining an account with the said bank at least for a period of one year prior to the date of lending along with evidence that he/she is a tax payer in the country of residence;

WHAT ARE THE STIPULATED TERMS FOR LOANS?
• Maximum amount to be borrowed: USD 20 million

• Repayment period: Shall be at least three years from the date of final loan disbursement

• Cost of Borrowing: All costs including fees, charges and interest applicable for the loans shall not exceed the prevailing Sri Lanka’s International Sovereign Bond rate in the secondary market + 200 basis points;

WHAT COULD BE THE PURPOSE OF BORROWING?
Working capital, investment in the business, restructuring of a company or to settle existing foreign currency loans.

details of the procedure to be followed in order to obtain the approval from the Central Bank and the application form required to be submitted to the Central Bank can be downloaded from the Central Bank of Sri Lanka Website www.cbsl.gov.lk

For further information, please call on 011-2477358 or 011-2477000 – Ext. 3126.

P.H.O. Chandrawansa
Controller of Exchange
Exchange Control Department

PDF of the Notice: Foreign Loans for Local Entrepreneurs - A Support to Rapid Economic Growth


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ADB to Finance Sri Lanka Infrastructure annually at $300mn over next Few Years

07th April 2011, www.lankabusinessonline.com

The Asian Development Bank would finance Sri Lanka with about 300 million dollars annually over the next few years, with roads, water supply and sanitation getting attention, officials said.

In the past three years Sri Lanka had got nearly a billion dollars of Asia Development Financing, with a peak of 457 million dollars in 2010 with emergency financing for former war torn areas.

Country director Richard Vokes said actual disbursements may fall off slightly with financing for port expansion in Colombo coming to an end, but a new 5-year country assistance strategy now being developed.

ADB financed a 300 million dollar breakwater to expand Colombo port in which the first terminal concession which may bring 500 million dollars of private investment has already been awarded.

ADB is also funding the power sector. Sri Lanka is expecting to provide power to all households by 2012.

"Going forward the expected lending level would be about 300 million dollars a year," Vokes told reporters.

"These may change towards the latter part of the 5-year period."

ADB Thursday formally hands over a section of Sri Lanka's Southern highway financed by the bank to the island's road development authority.

Another section financed by Japan is to be completed by July allowing the road to be opened to the public by late July or early August, Vokes said.

ADB is also financing road that link to the Southern highway.

ADB and Japan has been key funders of roads for decades working closely to help fill infrastructure gaps with Sri Lankan authorities. In recent years however China has also got involved.

Word on a key highway to Sri Lanka's north, the A-9 is now being financed by China. ADB is however financing provincial road in the north and the east.

Next year more provincial roads will be financed in the former war zones in Kilinochchi and Mullativu, Vokes said.

"So roads throughout the country, not only in the north and the east, will continue to be an important part of our program, but we are still discussing which road, particularly when we get to 2012, 2013," Vokes said.

Sri Lanka's RDA is keen to build a faster highway connecting Colombo to Kandy which has been identified as a bottleneck that in slowing traffic and has mentioned ADB as a source of financing.

Vokes said there is no firm commitment yet to finance the highway but discussions were on.

ADB is also financing water supply and sanitation.

"Water supply coverage is now pretty good," Vokes said. "Sanitation coverage remains quite low so those are areas that are likely to be important."

Vokes said water supply was now more widespread but more investment was needed in sanitation.

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Sri Lanka Gets $1.1bn Loans for Roads & Power from China, Japan & India

04th April 2011, www.bloomberg.com

Sri Lanka secured foreign loans valued at $1.1 billion, including from the governments of Japan and India, for projects ranging from road development to electricity transmission, the island’s information department said on its website.

The loans also include $500 million from China Development Bank Corp., $17.6 million from the Asian Development Bank and $38 million from the World Bank, it said.

To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net

To contact the editor responsible for this story: Hari Govind at hgovind@bloomberg.net

Sri Lanka Loan Scheme Helps Farmers and Fishermen in Former Northern War Zone

10th November 2009, www.lankabusinessonline.com

Farmers and fishermen have been among the main borrowers under a Sri Lankan government loan scheme to revive economic activity in the former northern war zone, the Central Bank said.

It said in a statement that a total of 1,875 loans valued at 264 million rupees has been disbursed under the 'Vadakkin Wasantham' (Awakening North) loan scheme by the state-owned People’s Bank and Bank of Ceylon.

Out of the total granted, 47 percent of loans (890) have been disbursed for agricultural purposes while 28 percent (524) were for trade and service sector activities.

"In agriculture, farmers have shown a keen interest to obtain loans for fruit cultivation, i.e. grapes and banana and livestock development activities."

The balance 25 percent (461 loans) has been obtained by borrowers in the fisheries, small and micro-industries sectors in the northern Jaffna peninsula.

The special loan package launched in July, 2009 is being implemented with loans up to 200,000 rupees being granted at an interest rate of 12 percent a year, with repayment over a period of five years.

The peninsula was cut off from the mainland for years as Tamil Tiger separatists controlled the land route.

Restrictions on fishing and farming were also imposed because of the war, affecting the livelihood of a large number of residents of Jaffna.

But the 30-year conflict ended in May when government forces defeated the Tigers, resulting in an economic revival in the north.

The Central Bank also said in addition to the loans already given under the scheme, another 5,927 people have also been registered under the two state banks and Hatton National Bank and Sanasa Development Bank for credit facilities.

It said three other credit programmes - a rural credit scheme, an agro-livestock loan scheme and a poverty alleviation microfinance project - were being implemented through participating financial institutions by the Central Bank in the Northern Province:

"With the commencement of agricultural activities for the (next) cultivation season this month, it is expected that a large volume of agricultural credit will be disbursed by PFIs in the Northern Province."

State Banks Lower Interest Rates in Sri Lanka on Loans to Customers to a Minimum of 8% and a Maximum of 12% from Today

28th October 2009, www.dailynews.lk, By Sanjeevi Jayasuriya

All State banks will bring down their interest rates on loans granted to customers to a minimum of eight percent and a maximum of 12 percent with effect from today.

Following the Central Bank’s reduction of interest rates to very low level of 3-4 percent and having stability in the interest rates, the country’s economic revival should accelerate.

The banking system will move to a low interest rate regime, Finance Ministry Secretary Dr. P.B. Jayasundara told theDaily News.

The Central Bank policy rate 7 percent will be a benchmark in the short-term interest rates to medium-term where Treasury Bills and Treasury Bonds rate would decline and the lending in other sectors will be in line with the reduced interest rates, he said.

The activities of the State banks were reviewed and instructions were given to the bank heads by President Mahinda Rajapaksa at a meeting held yesterday, at Temple Trees, Colombo.

The State banks will offer development oriented interest rates in the range of 8 to 12 percent in line with inflation.

The lending will be mainly for housing. The State banks will lend to public servants and the entire pending loan applications will be accommodated and would be cleared by mid December.

The State banks have the liquidity and they are in a position to do this due to 500 million bond issue that cleared the outstanding loans by the Government. The priority will be given to sectors such as agriculture, tourism, construction, livestock, fisheries and small and medium scale enterprises and these sectors will benefit under the low interest regime, he said.

The banks have funds to lend and help economic revival and provide stimulus to overall economic activities.

An outcome of the meeting was the suspension of the penal rate imposed on the non-performing loans. The removal of the penal rates would bring down cost of funds. Low interest rates would also apply to the outstanding balances of the existing loans, he said.

Banks are expected to notify customers about the amended loan installments due from them in terms of the reduced interest rates.

The President also decided to convene another meeting before November 30 to review the progress achieved in implementing the decisions taken at yesterday’s meeting.

State Revenue and Finance Minister Ranjith Siyambalapitiya, Secretary to the President Lalith Weeratunga, Treasury Secretary Dr. P.B. Jayasundera, Chairmen of all State banks and several other senior officials attended the meeting.