Sampath Bank to raise up to Rs.10bn through Basel III-compliant green bond issue

Sampath Bank PLC will open subscriptions on July 17 for a Basel III-compliant Tier 2 green bond issue, aimed at raising up to Rs.10 billion, to strengthen its capital base and support the sustainable financing initiatives, according to a Colombo Stock Exchange (CSE) circular.

The CSE said it had granted approval in principle for the listing of the bank’s Basel III-compliant Tier 2 listed, rated, unsecured, subordinated, redeemable green bonds, with a non-viability conversion feature.

The issue comprises an initial offering of up to 70 million bonds, with a par value of Rs.100 each, seeking to raise Rs.7 billion. 

The bank also has the option to issue a further 30 million bonds in the event of oversubscription, taking the total fundraising to a maximum of Rs.10 billion.

The investors will have the choice of two fixed-rate instruments. The five-year bond carries an annual interest rate of 13.0 percent, while the seven-year bond offers 13.25 percent. The interest on both instruments will be paid annually.

The proceeds from the green bond issue are expected to support the eligible environmentally sustainable projects, while also enhancing the bank’s Tier 2 capital position, in line with the Basel III regulatory requirements. 

The bonds include a non-viability conversion feature, a requirement for the regulatory capital instruments designed to absorb the losses under stressed conditions.

Capital Alliance Partners Limited has been appointed as the placement agent to the issue, while Central Depository Systems (Pvt.) Ltd will act as the registrar.