The Colombo Stock Exchange has approved in principle to list debt instruments amounting to Rs.7 billion by the country’s largest private banks in terms of assets, Commercial Bank of Ceylon PLC.
Commercial Bank will issue Rs. 5 billion in debentures initially, with an option to issue Rs. 2 billion more in the event of an oversubscription. The debentures will have two tenors of 5 and 10 years, carrying fixed coupon rates.
Commercial Bank will manage the issue by itself, while SSP Corporate Services (Private) Limited is listed as the Registrars to the Issue.
Ratings agency Fitch Ratings Lanka reaffirmed Commercial Bank’s debentures rating at ‘AA- (lka)’, which is tied to the bank’s national long-term rating of ‘AA(lka)/Stable’.
The debenture is to be used to strengthen the bank’s capital base and fund its future credit expansion.
Many banks are opting for debentures due to excessive private sector credit growth witnessed recently, going up to as much as 28.5 percent year-on-year this July.
Fitch said that Commercial Bank’s long-term rating could face changes if it expands further overseas, faces weaker deposits and deviates from its current risk appetite.