Sri Lanka bank capital issues are set to gain momentum this week as Commercial Bank of Ceylon PLC and Sampath Bank PLC prepare to raise up to Rs. 30 billion through Basel III-compliant debt instruments aimed at strengthening their regulatory capital.
Sri Lanka bank capital issues gather pace as two lenders launch Basel III offerings
The two listed banks have received approval in principle from the Colombo Stock Exchange (CSE) to list their respective capital instruments, marking one of the largest combined fundraising exercises in Sri Lanka’s domestic debt capital market this year.
Commercial Bank of Ceylon will open subscriptions on 16 July for a Basel III-compliant, listed, rated, unsecured, subordinated redeemable debenture issue featuring a non-viability conversion clause. The following day, Sampath Bank will launch its Basel III-compliant Tier 2 Green Bond issue with the same regulatory feature.
The Sri Lanka bank capital issues reflect continued efforts by commercial banks to strengthen their capital base while complying with Basel III regulatory requirements issued for the banking sector.
Commercial Bank plans to issue an initial 100 million subordinated debentures with a face value of Rs. 100 each, targeting Rs. 10 billion. The bank has also retained the option to issue two additional tranches of 50 million debentures each if investor demand exceeds the initial offering, allowing the total issue size to expand to Rs. 20 billion.
The debenture issue offers investors six fixed-rate investment options across five-year, seven-year and ten-year maturities. Annual effective yields range between 13.00 percent and 13.25 percent, with investors able to select either annual or semi-annual interest payments depending on the series. The bank’s Investment Banking Unit has been appointed as the manager to the issue, while SSP Corporate Services Ltd. will serve as registrar.
Meanwhile, Sampath Bank is seeking to raise up to Rs. 10 billion through a Basel III-compliant Tier 2 Green Bond issue. The initial offering consists of 70 million green bonds with a face value of Rs. 100 each, equivalent to Rs. 7 billion.
If demand exceeds the initial allocation, the bank may issue an additional 30 million bonds, increasing the total fundraising to Rs. 10 billion.
The Sampath Bank Green Bond issue comprises two investment options. The first is a five-year tranche carrying an annual interest rate and annual effective yield of 13.00 percent, while the second is a seven-year tranche offering an annual interest rate and annual effective yield of 13.25 percent. Interest on both series will be paid annually.
The bank’s Investor Relations Department will manage the issue, with Capital Alliance Partners Ltd. acting as placement agent and Central Depository Systems Ltd. serving as registrar.
The latest Sri Lanka bank capital issues highlight the growing use of domestic capital markets by financial institutions to strengthen their regulatory capital while supporting future lending capacity and business expansion. Basel III-compliant subordinated debt instruments are widely used by banks to enhance their capital adequacy ratios without issuing new equity.
The inclusion of a Green Bond by Sampath Bank also reflects the increasing importance of sustainable finance in Sri Lanka’s banking sector. Green bonds are designed to mobilise funding for environmentally sustainable projects while helping issuers diversify their funding sources and attract investors with environmental, social and governance (ESG) investment objectives.
With a combined fundraising target of up to Rs. 30 billion, the offerings by Commercial Bank of Ceylon and Sampath Bank are expected to attract significant institutional and high-net-worth investor interest, reinforcing confidence in Sri Lanka’s domestic debt capital market and the banking sector’s ongoing capital strengthening initiatives.