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ECONOMYNEXT – The Bank of Ceylon plans to issue BASEL III compliant debentures with non-viability write down features, to raise 5 billion rupees.
The Colombo Stock Exchange has approved in principle the application for listing of the debt securities, a statement on the CSE said.
Details of the issue were given as follows:
“Issue of 50,000,000 Basel III compliant tier 2 listed rated unsecured subordinated redeemable 5-year debentures with non-viability write down features at an issue price of LKR100 each to raise a sum of up to 5 billion rupees (LKR 5,000,000,000),”
“With an option to issue up to a further 50 million (50,000,000) of debentures to increase the sum by up to a further 5 billion rupees (LKR 5,000,000,000), at the discretion of the Bank in the event of an oversubscription of the initial issue.”
Last month, Fitch Ratings placed a viability rating of state-run Bank of Ceylon on rating watch negative, pending possible recapitalization for losses from state enterprise funding, while confirming a long-term rating at ‘CC’.
Sri Lanka’s budget for 2024 set aside 450 billion rupees for possible recapitalization of state banks.
“This recapitalisation plan, should it materialise to address potential capital erosion, may constitute extraordinary support,” Fitch said.
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Sri Lanka’s Bank of Ceylon viability rating on watch on recapitalization
“In accordance with Fitch’s Bank Rating Criteria, extraordinary capital support to restore viability would be viewed by Fitch as “bank failure” and would lead to the bank’s VR being downgraded to ‘f’ but subsequently, upon recapitalisation, be upgraded to a level commensurate with its standalone credit profile.” (Colombo(Dec5/2023)
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