BOC Rs.20bn sustainability bond oversubscribed on opening day

Bank of Ceylon (BOC) announced yesterday that its sustainability bond issue, seeking to raise up to Rs.20 billion, was oversubscribed on its opening day. 
In a filing to the Colombo Stock Exchange (CSE), the state-owned lender confirmed receiving applications exceeding Rs.20 billion for the Basel III-compliant, Tier 2, listed, rated, unsecured, subordinated, redeemable five-year sustainability bonds.
Consequently, the subscription list was officially closed at 4:30 p.m. yesterday. The bank stated that the basis of allotment would be notified to the CSE in due course. The issue was structured as an initial offering of Rs.10 billion, with options to raise an additional Rs.10 billion in two subsequent tranches of Rs.5 billion each.
The issue, which was restricted to ‘Qualified Investors’, offered two types of five-year bonds. ‘Type A’ offered a fixed coupon rate of 10.50 percent per annum, while ‘Type B’ offered a floating rate equivalent to the 12-month treasury bill rate plus 2.00 percent.
The proceeds from the issue are earmarked for the bank’s sustainable finance framework. The bank intends to utilise up to 75 percent of the funds for financing eligible social projects, with the remaining 25 percent allocated to eligible green projects. The funds will also contribute to the bank’s Tier II capital base to enhance its capital adequacy ratio.