Seylan raises US$ 15 mn term facility from Dubai’s Rakbank

Alpen Capital (ME) Limited, an investment banking advisory firm, also based in the UAE acted as the sole financial advisor to the transaction.

Seylan Bank will utilise the funds for general business development and portfolio growth in its Foreign Currency Banking Unit (FBCU).

The USD 15 million 5 year loan facilities was signed in Dubai, UAE on November 27, 2016 in the presence of Kapila Ariyaratne (Director/CEO - Seylan Bank), Ramesh Jayasekara (Chief Risk Officer- Seylan Bank), Peter England (CEO - Rakbank ), Rohit Walia (Executive Chairman - Alpen Capital) and other senior management members from all parties involved.

Rakbank CEO Peter England said they are pleased to have partnered with Seylan Bank to support their general expansion plan of the Foreign Currency Banking Unit. “This long term financing allows us to diversify our asset book into various geographies while introducing Seylan Bank to the region,”he said.

Seylan Bank Chief Executive Officer Kapila Ariyaratne said: “We are extremely pleased to sign up on this partnership as the Bank’s first long term financial agreement with the Middle East market, which reflects strong in investor confidence in Seylan Bank’s operations and future growth potential.”

Rakbank, also known as the National Bank of Ras Al Khaimah, is one of the UAE’s oldest and most dynamic financial institutions.

Unspecified action taken against Perpetual Treasuries: CB Governor

ECONOMYNEXT - Sri Lanka's central bank has taken unspecified action against Perpetual Treasuries, a primary dealer in government securities that was involved in controversial deals.

Central Bank Governor Indrajit Coomaraswamy said the Monetary Board, the highest decision-making body had taken action on November 07 and also later but decline to elaborate.

He said details would be revealed later.

A parliamentary committee has recommended that the profits made from allegedly rigged auctions should be clawed back and legal action also taken against the former Central Bank Governor Arjuna Mahendran.

Perpetual Treasuries is connected to Mahendran's son-in-law Arjuna Aloysius.

Sri Lanka to lift age 70-year age restriction on company directors

ECONOMYNEXT - Sri Lanka has proposed to remove a restriction of persons over the age 70 serving on the boards of private companies.

At the moment, the term of a person reaching 70 years can be extended by a special resolution approved by shareholders under Sri Lanka's company law.

"…I propose to remove this restriction enabling Chairmen and Members of the Board of Directors who are also shareholding directors to continue to serve on the Board beyond the age of 70 years," Finance Minister Ravi Karunanayake said in the text of a speech in a budget for 2017.

It is not clear why such a proposal was brought in the budget. There had been no public discussion or debate on the matter before the proposal.

Colombo Stock Exchange Market Review – 29th Nov 2016

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Colombo Stock Exchange Trade Summary 29-Nov-2016

Colombo bourse remained on negative side amid foreign outflows. Benchmark index slid by 7.00 index points (-0.11%) to end at 6,231.87 while high cap constituent S&P SL20 index lost 2.96 index points or 0.09% to end at 3,456.90.

Premier blue-chips, Nestle Lanka (closed at LKR 2,014.30, -1.6%), Lion Brewery (closed at LKR 451.00, -3.7%) and Dialog Axiata (closed at LKR 10.10, -1.0%) impacted the index performance. However, gains in Sri Lanka Telecom (closed at LKR 35.60, +1.7%) and Overseas Realty (closed at LKR 20.00, +3.1%) eased the negative impact.

Daily market turnover hit five week high of LKR 1bn supported by hefty crossings recorded in selected blue-chips. Aitken Spence contributed for bulk of the turnover (LKR 307mn) underpinned by five crossings of 4.1mn shares at LKR 65.00. Teejay Lanka was the next best contributor with LKR 201mn. Two crossings of 3.5mn shares of Teejay Lanka changed hands at LKR 42.50. John Keells Holdings (LKR 135mn) and Ceylon Tobacco (LKR 92mn) were among top contributors.

Another two crossings were witnessed in John Keells Holdings (0.36mn shares at LKR 144.50) and Hatton National Bank (0.20mn shares at LKR 218.00). Aggregate value of crossings accounted for 50% of the turnover.

Losers outweighed the gainers 84 to 57, while 79 counters remained unchanged. High investor activity was witnessed in John Keells Holdings, Teejay Lanka, Tokyo Cement non-voting and Alumex.

Foreign investors were net sellers for the day with a net foreign outflow of LKR 296mn. Foreign participation was 57%. Net foreign outflows were seen in Aitken Spence (LKR 276mn), John Keells Holdings (LKR 66mn) and Teejal Lanka (LKR 33mn). Net foreign inflow was mainly seen in Commercial Bank (LKR 46mn).

Source: LSL

Sri Lanka shares hit near 8-mth low on foreign fund outflow

Reuters: Sri Lankan shares fell on Tuesday for the third straight session to end at a near eight-month low as foreign investors trimmed their exposure to the island nation's risky assets amid concerns over budget tax proposals.

The Colombo stock index ended 0.11 percent down at 6,231.87, its lowest close since April 7. The bourse lost 1.17 percent last week, marking its third straight weekly fall.

A proposed hike in various taxes and fees would reduce disposable income and challenge consumption-led growth, analysts said.

"Investors are concerned over the current uncertainty and they are worried over the sustainability of the rates given the current economic uncertainty," said Dimantha Mathew, head of research at First Capital Equities (Pvt) Ltd.

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees year-on-year and meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

The market shrugged off the central bank's key monetary policy decision on Tuesday to keep rates unchanged. Brokers said investors are concerned about the sustainability of the rates.

At the post-monetary policy media briefing, central bank Governor Indrajith Coomaraswamy said aggressive monetary policy tightening by the U.S. Federal Reserve will have an impact on the foreign outflow.

Turnover was 1.01 billion rupees ($6.78 million), more than this year's daily average of 695.1 million rupees.

Foreign investors sold a net 295.8 million rupees worth of shares on Tuesday, extending the year-to-date net foreign selling to 1.68 billion rupees.

Shares of Dialog Axiata Plc fell 0.98 percent while Asiri Hospitals Plc fell 0.77 percent. 

($1 = 149.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Monetary Policy Review – November 2016 - Policy rates unchanged

As envisaged, the growth of credit extended to the private sector by commercial banks decelerated considerably during September 2016, in response to monetary policy measures adopted by the Central Bank since end 2015. Accordingly, the year-on-year growth of private sector credit by commercial banks was recorded at 25.6 per cent in the month of September 2016 compared to 27.3 per cent in the previous month. Despite the deceleration in credit extended to the private sector, broad money (M2b) growth accelerated to 18.4 per cent, year-on-year, in September 2016 in comparison to 17.3 per cent recorded in the previous month, as borrowings by the public sector from commercial banks expanded during the month. In the meantime, rupee liquidity conditions in the domestic money market have returned to a balanced level, which will help stabilise market interest rates at current levels. 

Headline inflation as measured by both the National Consumer Price Index (NCPI) and Colombo Consumers’ Price Index (CCPI) remained stable around mid-single digit levels in October 2016. Further, core inflation based on both NCPI and CCPI remained unchanged in the month of October 2016 compared to the previous month. The adjustments made to the tax structure by the government are expected to have a one-off impact on inflation from November 2016 while the overall impact of the Budget 2017 on inflation is estimated to be favourable. Aggregate demand pressures are expected to remain well contained supported by the pre-emptive monetary policy measures coupled with the continuation of the envisaged fiscal consolidation process, and as a result, inflation is expected to remain stable in mid-single digit level in the period ahead. 

 On the external front, the deficit in the trade balance contracted by 12.0 per cent, year-onyear, in the month of September 2016 as export earnings recorded a growth for the second consecutive month amidst the contraction in expenditure on imports. Earnings from tourism were estimated to have increased by around 14.6 per cent during the first ten months of 2016, while workers’ remittances recorded a growth of 3.5 per cent during the same period. The gross official reserve position was estimated at US dollars 6.1 billion at end October 2016, while the Sri Lankan rupee depreciated by 2.6 per cent against the US dollar thus far during 2016. Meanwhile, Sri Lanka received the second tranche of the Extended Fund Facility (EFF) Programme with the International Monetary Fund (IMF) in November 2016, after the successful completion of the first review of the Programme by the IMF. The continuation of the EFF Programme is expected to strengthen the economy by facilitating medium to long term financial inflows in the period ahead. 

Considering the above developments, the Monetary Board, at its meeting held on 28 November 2016, was of the view that the current monetary policy stance is appropriate, and decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 7.00 per cent and 8.50 per cent, respectively.