Subscription for BOC’s Rs.20bn sustainability bond opens on Dec. 22

Bank of Ceylon (BOC) announced yesterday that the subscription list for its Basel III-compliant sustainability bond issue would officially open on December 22, 2025. 
The state-owned bank is seeking to raise up to Rs.20 billion through the issue, which offers a fixed coupon rate of 10.50 percent per annum.
The bank confirmed the final details in a circular to the Colombo Stock Exchange yesterday, noting that the bond issue would feature two types of five-year debentures. 
The ‘Type A’ bonds will carry the fixed interest rate of 10.50 percent (AER 10.50 percent), while the ‘Type B’ bonds will offer a floating rate equivalent to the 12-month treasury bill rate plus 2.00 percent. The bank has outlined a detailed strategy for the utilisation of the proceeds, which are earmarked to expand its sustainability loan book under its ‘Sustainable Finance Framework’. According to the prospectus, the bank intends to utilise the entire Rs.20 billion within 24 months from the date of allotment. A notable feature of the allocation strategy is the heavy weighting towards the social impact; up to 75 percent of the funds are designated for financing or refinancing the eligible social projects, while the remaining 25 percent will be utilised for the eligible green projects.
The prospectus further elaborates that up to 70 percent of the proceeds may be used to refinance the existing eligible green and social projects, with a look-back period of 24 months, ensuring that the bank can support the ongoing initiatives that are already delivering measurable benefits. The balance will be directed towards fresh financing.  The eligible social project categories identified for funding include employment generation for SMEs and microfinance clients impacted by socioeconomic crises, food security programmes and development of essential services such as healthcare and education. On the environmental front, the green component will target renewable energy generation, energy efficiency, green construction and clean transportation initiatives. Beyond the lending objectives, the subordinated nature of these bonds will allow BOC to count the proceeds towards its Tier II capital. This is expected to enhance the bank’s capital adequacy ratio (CAR) and help minimise the maturity mismatches in the bank’s asset and liability portfolios. Based on the unaudited figures as of September 30, 2025, the bank expects its total CAR to improve from 16.76 percent to approximately 18.48 percent, if the full Rs.20 billion is raised. 
The CSE granted approval in principle for the listing on December 11, 2025. People’s Bank has been appointed as the trustee to the issue. The issue is structured as an initial offering of 100 million bonds to raise Rs.10 billion, with two subsequent options to raise an additional Rs.5 billion each in the event of oversubscription. 
The investors are advised that these instruments carry a non-viability write-down feature as mandated by the Basel III regulations. If the Central Bank of Sri Lanka determines a ‘trigger event’—such as the point where the bank would become non-viable without a write-down or public sector capital injection—the bonds will be permanently written off and converted to Additional Tier 1 (AT1) instruments. The issue is limited to Qualified Investors and the minimum subscription requirement is Rs.10,000, though individual qualified investors must invest a minimum of Rs.5 million. The subscription list will remain open for 14 market days until January 12, 2026, unless oversubscribed earlier.