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Pan Asia Bank announces Rs.4bn debenture issue

8 September 2015 02:44 am - 0     - {{hitsCtrl.values.hits}}

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Pan Asia Banking Corporation PLC (PABC) yesterday announced the opening of its Rs.4 billion senior debenture on September 23, the second such debenture issue by the lender in 12 months. 

The bank issued a five-year, Rs.3 billion subordinated debenture on October 24, 2014, which was oversubscribed on the opening 
day itself. 

This is also the first debenture issue in two months to be listed on the Colombo Stock Exchange (CSE). The last such debenture issue was by Commercial Leasing and Finance Company PLC on July 14, which raised Rs.5 billion. 

Sri Lanka’s debt issuers who played a wait-and-see approach leading up to the general election on August 17, are now in quandary due to the upward pressure mounting on the short-term interest rates due to excessive money printing by the state to inject liquidity. 

Since the end of July, the secondary market one-year Treasury bill rate has moved up by 70 to 80 basis points while the two-year and 10-year bond maturities have increased by between 80 and 120 basis points. 

According to the CSE sources, there are eight listed debenture issues in the pipeline but a stalemate is seen in the primary debt issuance market. 
The Pan Asia Bank senior debenture issue was assigned an expected rating of BBB by Fitch Ratings Lanka in June, in line with the bank’s national long-term rating. 

“The proposed issuance is likely to have tenors of three and four years, with a combination of fixed-rate and floating-rate coupons. PABC expects to use the proceeds to reduce structural maturity mismatches, diversify the funding mix and secure medium-term funding,” Fitch stated. 

The initial issue of Rs.2 billion will be upsized by the bank by another Rs.1 billion in the event of the initial tranche being oversubscribed. The bank will further upsize the issue by Rs.1 billion, provided the second tranche being oversubscribed. 

The par value of a debenture unit is Rs.100. The bank is yet to disclose of the interest rates offered through its prospectus to be released on September 11. 
People’s Bank Investment Banking Unit acts as the joint managers to the issue with Pan Asia Bank. 

Pan Asia Bank recently received two additional years till December 31, 2017 to meet the minimum Tier I capital requirement of Rs.10 billion by the Central Bank. 

During the six months ended in June 30, 2015, Pan Asia Bank increased its net profits by 156 percent to Rs.451 million with a 14 percent growth in its loans and receivables. 

Year-to-date, 16 Lankan corporates have raised Rs.43 billion. This is in comparison to Rs.64 billion raised in 2014 through 20 debt issues
Meanwhile, Bank of Ceylon, the largest lender in Sri Lanka, last week said that they were still undecided whether to go ahead with their Rs.8 billion subordinated debt but said were taking all necessary approvals required. 

The second largest private lender, Hatton National Bank PLC, last week received AA- and A+ expected ratings from Fitch Ratings Lanka for its proposed five-year Rs.10 billion senior and subordinated debentures.
 
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