BOC to secure more than Rs 6 bln from debenture

Bank of Ceylon's (BoC) latest debenture issue of Rs. 3 billion, which opened on Thursday has witnessed a lot of local interest, having been oversubscribed within a few hours of opening, a BoC official said.

"The Bank of Ceylon has already received subscriptions running over Rs. 3.5 billion and it's almost all local subscriptions," P.A. Lionel, DGM of Treasury and Investment BoC told the Business Times. He said that they plan to go up to Rs. 6 billion and expect to close it by next week.

The issue of 50 million unsecured redeemable debentures at the price of Rs.100 each carries a maturity period of five years and offer customers three interest payment options.

Mr. Lionel said the money once raised will enable the bank to increase its tier II capital in terms of base-II and strengthen the capital base, enhance the single borrower limit, minimise the interest rate risk and gap exposures in the bank's assets/liability portfolio. While foreign investors are able to take part in this investment, he said the issue is

While foreign investors are able to take part in this investment, he said the issue is mainly aimed at local investors since they have shown an interest in debentures. Local foreign banks have also indicated an interest, he said.

mainly aimed at local investors since they have shown an interest in debentures. Local foreign banks have also indicated an interest, he said.

BoC's capital adequacy ratio (a ratio of a bank's capital to its risk) is now at 10.8 per cent and with this debenture issue, they expect to up it by 12 per cent.

The funds are also expected to help the bank to reduce the dependency on volatile short term borrowings, etc.