LOLC Finance debentures have officially entered the Sri Lankan capital market following the company’s listing of a Rs. 15 billion senior unsecured issue. The move strengthens LOLC Finance’s funding base while offering investors diversified, medium-term yield opportunities.
LOLC Finance debentures attract investor interest with fixed and floating options
Sri Lanka’s financial services sector received a fresh boost as LOLC Finance PLC announced the listing of its latest debenture issue on the Colombo Stock Exchange. The offering, valued at Rs. 15 billion, consists of listed, rated, senior, unsecured, redeemable five-year debentures, reflecting continued investor confidence in the non-bank financial institution.
The listing follows a successful capital-raising exercise by LOLC Finance, one of the country’s leading finance companies with a strong footprint across retail, SME, and corporate lending. By bringing these instruments to the market, the company aims to strengthen its long-term funding profile while maintaining prudent asset-liability management amid changing interest-rate conditions.
The LOLC Finance debentures are structured across three distinct tranches, catering to investors with varying risk appetites and income preferences. Two tranches offer fixed interest rates, while the third is linked to a floating benchmark, allowing investors to benefit from movements in Treasury Bill yields. This diversified structure enhances the appeal of the issue in a market where investors increasingly seek both stability and flexibility.
One tranche carries a fixed annual interest rate of 11.25 percent, payable annually, with an effective annual rate of 11.25 percent. Another tranche offers a slightly lower fixed coupon of 10.95 percent, payable on a semi-annual basis, translating to an effective annual rate of 11.25 percent. These fixed-rate options are designed to attract investors seeking predictable income streams over a five-year horizon.
The third tranche introduces a floating rate structure, offering a return equivalent to the 364-day Treasury Bill rate plus a margin of 2.50 percent per annum, payable annually. This option provides a hedge against interest-rate volatility and is particularly attractive in an environment where rate movements remain closely watched by both institutional and retail investors.
Each tranche of the LOLC Finance debentures has been assigned a unique security identifier and international securities identification number, ensuring transparency and ease of trading once listed. The instruments are senior and unsecured, ranking ahead of subordinated debt while not being backed by specific collateral, a structure commonly adopted by established finance companies with strong credit profiles.
The listing underscores LOLC Finance’s ability to access the capital market at competitive rates, supported by its credit rating and track record of meeting financial obligations. Market analysts note that such issuances not only provide funding for balance-sheet growth but also deepen the domestic debt market by offering investors a broader range of quality instruments.
From a strategic perspective, the funds raised through the debenture issue are expected to support LOLC Finance’s ongoing lending activities and operational requirements. As credit demand gradually recovers across key sectors of the economy, stable long-term funding remains essential for finance companies to sustain growth while managing liquidity and regulatory capital requirements.
The successful listing of LOLC Finance debentures also reflects broader investor sentiment toward well-established non-bank financial institutions in Sri Lanka. Despite macroeconomic uncertainties, demand for rated, listed debt instruments has remained resilient, particularly when issuers demonstrate sound governance, scale, and market presence.
For investors, the debentures present an opportunity to gain exposure to a leading finance company through instruments that balance yield, tenor, and risk. The combination of fixed and floating rate options allows portfolio diversification, while the five-year maturity aligns with medium-term investment strategies.
Overall, the LOLC Finance debentures listing marks another significant capital-market transaction, reinforcing the company’s standing and contributing to the continued development of Sri Lanka’s corporate debt landscape.