Industry Analysis

Seylan Bank’s Rs. 10 Billion Debenture Issue Oversubscribed on Opening Day

Seylan Bank announced that its recent Rs. 10 billion debenture issue was oversubscribed on its opening day, receiving applications for over 100 million debentures, indicating strong investor confidence.

Initially, the bank issued Rs. 5 billion in Basel III-compliant, Tier 2, listed, rated, unsecured, subordinated, redeemable debentures. Priced at Rs. 100 each, these debentures have maturity periods of five and seven years and include a non-viability conversion feature. Due to oversubscription, the bank exercised the option to issue an additional Rs. 3 billion in debentures, with a further option to issue another Rs. 2 billion under the same terms. The debentures were rated BBB (lka) by Fitch Ratings Lanka Limited and will be listed on the Colombo Stock Exchange.

“We are pleased to note the overwhelming response to the debenture issue. It is a clear indication of investor confidence reverberates in the market. We are grateful to our investors and the joint managers, Capital Alliance Partners Limited and Acuity Partners (Private) Limited, for their support, and look forward to continuing to deliver value and stability in navigating the future,” stated Seylan Bank Director/CEO Ramesh Jayasekara.

The primary objectives of the debenture issue were to strengthen the bank’s Tier 2 capital base in compliance with Basel III requirements, expand the lending portfolio with a focus on Small and Medium Enterprises (SME) and export-oriented industries, and reduce asset-liability maturity mismatches. This strategic move aims to enhance the bank’s capital structure, support key economic sectors, and improve overall financial stability.

The successful debenture issue also highlights Seylan Bank’s resilience and growth, with the bank reporting impressive financial performance for Q1 2024, including a Profit Before Tax (PBT) of Rs. 3,704 million (a 115% increase compared to Q1 2023) and a Profit After Tax (PAT) of Rs. 2,295 million (a 102% growth for the period).