Sri Lanka bond yields up 30 - 129bp at auction

ECONOMYNEXT - Sri Lanka sold 15.6 billion rupees of 5, 8 and 15 year bonds at Tuesday's auction with the 15-year bonds up 129 basis points from the last auction on May 28, data from the state debt office showed.

The debt office sold 3.7 billion rupees of 5-year bonds maturing on 01.05.2020 at an average yield of 9.65 percent up 30 basis points from the last auction of August 31.

The yield on 8-year bonds maturing on 01.09.2023 rose 49 basis points to 9.76 percent from the last auction on August 25 with 4.47 billion rupees raised.

The debt office sold 7.42 billion rupees of 15-year bonds maturing on 15.05.2030 at 10.96 percent, up 129 basis points from the last auction on May 28. On August 25 bids were rejected for similar maturities.

The debt office rejected bid for 11 year bond maturing on 01.06.2026.

Sri Lanka's bond yields started to rise after domestic excess liquidity ran out with high demand being triggered by state domestic borrowing and spending generating foreing reserve losses. Over the last three months the Central Bank also printed over 100 billion rupees to keep short-term interest rate down and trigger a balance of payments crisis.

Sri Lankan shares end lower as investors await new economic policies

Reuters: Sri Lankan shares closed at a near eight-week low on Tuesday, falling for a third straight session, as investors waited for fresh economic policies from the newly-formed government and as a weaker rupee curbed investor risk appetite.

Rising market interest rates also hit sentiment, stockbrokers said.

The main stock index ended 0.35 percent lower, or down 25.24 points, at 7,124.25, its lowest close since July 16.

Turnover slumped to the lowest since July 21, at 430.6 million rupees ($3.11 million), and well below this year's daily average of 1.14 billion rupees.

"Today's equities wrapped up in red, in lacklustre trade. Investors are awaiting new policy initiatives which are needed to drive the economy forward," SC securities said in a note to investors.

A weaker rupee is also weighing on sentiment as most investors have turned cautious until they see signs of the rupee stabilising, traders said.

The Sri Lankan rupee fell for the third straight session on Tuesday after central bank last week effectively floated the currency by ceasing to quote its own reference rate.

Foreign investors sold a net 34.2 million rupees ($247,396) worth of shares on Tuesday, extending the year to date net foreign outflow to 3.45 billion rupees.

Shares in conglomerate John Keells Holdings Plc fell 1.18 percent, while Commercial Bank of Ceylon Plc fell 1.25 percent, dragging the index down.

($1 = 138.2400 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

CB to restructure six ailing Finance Companies

By Ishara Gamage

Ceylon Finance Today- The Central Bank of Sri Lanka (CBSL) is in a fresh initiative to restructure six ailing finance companies, a bank official said yesterday.

Under the Supreme Court direction, the CBSL is also planning to appoint two Treasury officials to the Golden Key Credit Card Co Ltd's board. Golden Key, which is now under the CBSL's liquidation process, will retain Priyantha Fernando as the Chairman, official said.

The CBSL earlier abandoned the financial sector consolidation process which was introduced by the previous central bank regime and the present government was not encouraging such type of forceful consolidations.

Three senior CBSL officials who recently toured Malaysia on an observation visit, were now currently involved in this restructuring process, he said.

They have studied the similar successful restructuring cases in Malaysia, he said.
Central Investments & Finance PLC (CIFL) which collapsed almost two years is our biggest worry at the moment, he remarked.

The company's total asset value has now reduced to Rs 216 million from Rs 3.8 billion.
According to CBSL sources, The Finance, City Finance Corporation Ltd, The Standard Credit Finance Ltd and two other EAP Group owned companies were currently facing liquidity problems.

When contacted by Ceylon FT, City Finance Corporation Ltd Director Dinesh Hettiarachchi said that he was expecting some overseas investments. Singapore based One Asia Investment Partners said that they have already invested Rs 175 million in this company.

Former Foreign Minister Rohitha Bogollagama's son DK Bogollagama is now a Vice President, Head of South Asia at One Asia Investment Partners ("One Asia")."At least we need another one billion rupees for running this company. Earlier, the Central Bank agreed to provide some financial assistance from its deposit insurance scheme but it did not work," the City Finance official said.

The Finance also needs some additional Rs. 3 or 4 billion to overcome its accumulated losses and liquidity problems, its official said.

The Standard Credit Finance Ltd is now under the Entrust group.

The EAP group earlier had a plan to sell one of its finance companies.

Four independent directors of the CIFL recently alleged that there had been many manipulated figures in the financial statements of the company since 2004.
www.ceylontoday.lk

Nod for Orient Finance IPO

The Central Bank of Sri Lanka has granted approval for listing the shares of the Orient Finance PLC, formally known as Bartleet Finance PLC on the Colombo Stock Exchange by way of an Initial Pubic Offer (IPO) subject to approval of the Colombo Stock Exchange.
www.dailynews.lk

IFC to help SANASA Development Bank grow

IFC, a member of the World Bank Group, will provide advisory services to SANASA Development Bank as it expands to include more micro and small businesses, cooperatives, and retail clients. Importantly, the bank will now reach more rural small businesses across the country, boosting financial inclusion.

IFC has been a long term advisory partner with SANASA Development Bank since 2010, and also invested in its equity in 2012. Over the course of the next two years, IFC's assistance will strengthen the bank's overall operational capabilities and risk management framework.

"SANASA Development Bank's growth strategy involves long-term sustainable growth in three important sectors, SME, retail, and cooperative - to make financing more accessible to a larger number of people," said Nimal C Hapuarachchi, Chief Executive Officer of SANASA Development Bank PLC.

"A transition of this depth requires strong and timely partnerships. IFC's long-term partnership with SANASA Development Bank will significantly impact the bank's value-creation process," said Samadanie Kiriwandeniya, Chairperson of SANASA Development Bank PLC.

Micro, small, and medium enterprises play a critical role in Sri Lanka's economic development. However, access to finance remains a key constraint to the development of small businesses.

"Supporting Sri Lanka's largest private microfinance institution's transformation into an SME and retail bank will help reach much needed financial services to micro, small and medium enterprises in rural parts of the country. As a long term partner to SANASA, IFC will help the bank expand formal financial services to under-served cooperatives and rural micro and small businesses," said Mengistu Alemayehu, IFC's Regional Director for South Asia.

Sri Lanka is a priority country for IFC. IFC's committed portfolio in Sri Lanka is now $419 million and covers projects across a range of sectors, including infrastructure, tourism, renewable energy, finance, and healthcare. IFC also provides advisory services to promote sustainable growth among small and medium enterprises by facilitating access to finance, and by offering capacity-building and training opportunities.

SANASA Development Bank PLC, a Licensed Specialized Bank by Central Bank of Sri Lanka, is committed to uplifting the standards of living for low income Sri Lankan families and MSMEs with its financing activities. Currently, with 85 branches and more than 4,500 active credit societies island-wide, the bank provides a wide range of products and services - including technical assistance programs and entrepreneurship skills, catering to the financing needs of low income groups and MSMEs in the country. As at March 2014, SDB had over 900,000 account holders - borrowers and deposit holders, and 2.4 million non-members across Sri Lanka.
www.dailynews.lk

Pan Asia Bank to issue 20 m debt with room to offer further

The Colombo Stock Exchange has approved in principle an application for listing the debt securities of the PABC.

PABC will initially issue 20 million rated, unsecured senior debentures with an option to issue up to a further 10 million of said debentures and with a further option to issue upto 10 Million of said debentures at a par value of Rs100 at the discretion of the bank in the event of an over subscription of the issue.

The funds thus raised are intended to finance the growth momentum of the bank in the future. Subscription list will open on September 23, 2015. Prospectus would be delivered to member firms and trading members on September11,2015. Joint Managers to the offer will be People's Bank Investment Banking Unit. IH
www.dailynews.lk

NDBIB arranges Rs. 1 b for Resus Energy Group

NDB Investment Bank Ltd. (NDBIB) is continuing to establish itself as the leader in the investment banking space by providing corporate advisory services especially with regard to structuring M&A transactions, which include Management Buy Outs (MBOs) and raising debt via capital markets in Sri Lanka.

As part of the capital restructuring process to unlock shareholder value, the subsidiaries of Resus Energy PLC (REP, formerly known as Hemas Power PLC) raised over Rs. 1.0 billion via a syndicated debt facility with the participation of National Development Bank and Sampath Bank. NDBIB played a key role in this transaction as financial advisor and arranger for the debt facility and has been in the forefront in the restructuring process of REP group.

In late 2014, NDBIB facilitated the acquisition of 75% of Resus Energy PLC from Hemas Holdings PLC, by putting together a consortium of equity investors, viz; NDB Capital Holdings Ltd., ACL Cables PLC and Trydan Partners Ltd. (i.e. the management team), which amounted to over Rs. 1.7 billion.

As the final stage of the said restructuring process, the directors and the shareholders of REP have approved a share repurchase at Rs. 24 per share, which has already been announced to the Colombo Stock Exchange.

In addition to its corporate advisory services, NDBIB has been active and enjoy leadership position in the local debenture market having already raised over Rs. 17 billion for clients of various sectors via the capital markets in Sri Lanka.

NDBIB is a fully-owned subsidiary of NDB Capital Holdings Ltd., which in turn is a 99.66%-owned subsidiary of National Development Bank PLC. Euromoney, the world’s premier financial markets magazine, adjudged NDBIB as the ‘Best Investment Bank in Sri Lanka’ at the recent Awards for Excellence 2015 for the fourth consecutive year.
www.ft.lk