MBSL debenture first tranche snapped up on opening day

Merchant Bank of Sri Lanka & Finance PLC (MBSL), a unit of State banking giant Bank of Ceylon yesterday said its first tranche issued to raise Rs.1.0 billion in debentures was oversubscribed on the opening day as the company received applications in excess of 10 million debentures issued by 12.30 p.m. 
The company in a stock exchange filing said it would leave the subscription list open until the balance tranche of 10 million debentures is subscribed or until May 12, whichever is earlier.  
On April 03, the licenced finance company announced it would issue a 5-year subordinated debenture to raise Rs.2 billion via 20 million debentures at an issue price of Rs.10.
The company said it would first issue 10 million debentures and would upsize the issue by another 10 million debentures in the event of an oversubscription of the initial tranche. 
The subordinated debentures qualify for Tier II capital of the finance company and could be utilized to expand its risk weighted assets – loan book. 
For the year ended December 31, 2016, MBSL has expanded its loans and leases book by around Rs.3.7 billion. 

The total loans and leases of the company was Rs.26.4 billion while the total assets of the MBSL group were Rs.33.6 billion by December end.
The company had a deposit base of Rs.18.5 billion.  
For the financial year ended December 31, 2016, the company reported earnings of Rs.205 million from a loss of Rs.709, 000 in the previous year. 
The debenture funds are therefore meant to bolster the asset base of the company expecting higher financial performance. 
This is the first five-year, listed debenture issue for the year. 
Bank of Ceylon holds 74.49 percent stake in MBSL while another 6.51 percent stake is held by Bank of Ceylon’s Ceybank Unit Trust.