20 March 2018 12:13 am
DFCC Bank PLC has received the preliminary approval to list the Basel III-compliant sub-debt instruments worth up to Rs.7 billion, on the Colombo
Stock Exchange.
The bank said it would issue 50 million Basel III-compliant, Tier II, listed, rated, unsecured, subordinated, redeemable debentures with a non-viability conversion at an issue price of Rs.100 each, with an option to issue up to further 20 million of the said debentures in the event of the oversubscription of the initial tranche.
Fitch Ratings has assigned the final national long-term rating of ‘A+(lka)’ to the issue. The debentures will have maturities of five and seven years and carry fixed coupons.
The bank plans to use the proceeds to support its balance sheet growth and to improve its capital adequacy in light of new regulatory requirements.
The issue is scheduled to open on March 26 and NDB Investment Bank and Acuity Partners are functioning as joint managers to the issue.
Sri Lanka’s banks are seen racing to issue Basel III-complaint Tier II debt during 2018 as the banks face a steeper increase in minimum capital ratios from January 2019.
“Most banks will need to raise capital to meet higher Basel III requirements that take full effect in January 2019 and to support balance sheet expansion,” Fitch Ratings said at the beginning of the year.
Sampath Bank PLC and Seylan Bank PLC have also announced the plans to go for Basel III-compliant debt issues.