The fortnightly period from October 25 to November 7, 2016 witnessed a mass of debenture issues, where six debt issuances (four from banks) aspiring to raise a total value of approximately Rs.36 billion, were vying each other for subscriptions.
Amidst the cluster of debenture issues, Senkadagala Finance PLC’s Rs.3 billion, rated, senior, unsecured, listed, redeemable debenture issue was successfully oversubscribed within the initial few hours of opening the issue, receiving approximately Rs.4 billion worth of applications. Hence, the subscription list was closed at 4:30 p.m. on the same day of opening.
The company issued 20,000,000 senior, unsecured, listed, redeemable, rated debentures of Rs.100.00 each to raise Rs.2 billion (Rs.2,000,000,000), with an option to issue a further 10,000,000 of the said debentures to raise up to Rs.1 billion (Rs.1,000,000,000) in the event of an oversubscription of the initial tranche. The issue was rated BBB+(lka) by Fitch Ratings Lanka Limited.
Notably, the attractive coupon rates offered makes way for a lucrative investment, especially in the light of the existing tax exemptions present for listed debentures. The issue comprised of three variants of two-year, three-year and four-year debentures, offering the investors an ideal opportunity to fix their returns at 12.50 percent p.a. semi-annually (AER - 12.89 percent), 13.25 percent p.a. semi-annually (AER - 13.69 percent) and 13.75 percent p.a. (AER – 14.22 percent), respectively. Floating rate options were also offered at 1.50 percent and 1.75 percent premium over the six months gross treasury bill rate for the three-year and four-year
Established in 1968, Senkadagala Finance PLC is one of the largest licensed deposit taking financial institutions in the country, which is registered by the Monitory Board of the Central Bank of Sri Lanka with a creditable rating of BBB+ by Fitch Ratings Lanka Ltd and with over 80 branches islandwide. They offer both fund-based services such as leasing, hire purchase financing, pawning and pledge loans as well as fee-based services including insurance brokering an IT-related consultancy.
The debenture issue follows on the wake of a very successful quarter for Senkadagala Finance PLC, with net profits seen soaring by 69 percent toRs.236 million and net interest income by 28 percent to Rs.1.1 billion, as at September 30, 2016 in comparison to the corresponding quarter of last year. The 9 percent improvement in the deposit base to Rs.6.85 billion also bears testimony to the solid growth achieved by the company, continuously for the past few years.
The debenture issue was jointly managed by Areva Investments (Pvt.) Ltd and Capital Alliance Partners Ltd and the proceeds raised from the issue will be utilized to expand the lending activities of the company.