Tuesday 7 October 2014

BOC debenture draws Rs. 8.5 b demand

The recent debenture issue of the Bank of Ceylon (BOC) had drawn Rs. 8.5 billion worth of applications.

It offered 40 million unsecured subordinated redeemable debentures at Rs. 100 each with the option to issue an equal amount in the event of an oversubscription.

Overall there had been 75 applications requesting for 85.192 million debentures. The debenture was the sixth to be issued by BOC, and its first for the year. Fund raised from the issue will be used to strengthen BOC’s Tier 2 capital base and reduce asset and liability maturity mismatches.

Rated ‘AA’ by Fitch, the debenture issue comprised of five types of debentures. Type A with a five-year tenure and 8% payable annually, Type B with a five-year tenure and 7.75% (Annual Equivalent Rate, AER 7.98%) payable quarterly, Type C with a tenure of five years and six months gross T-bill rate +0.50% payable bi-annually, Type D with a tenure of eight years and 8.25% payable annually and Type E with a tenure of eight years and six months gross T-bill rate +0.50% payable bi-annually.

Type A drew the highest number of applications 40 requesting for 54.5 million debentures followed by Type B – 14 applications requesting for 2.15 million debentures and Type D with 10 applications requesting for 20.28 million debentures. Type C drew eight applications with 8.25 million debentures and Type E saw three applications requesting for 300 debentures. Retail applications amounted to 64 whilst applications with payment by bank guarantees were 11. 
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