Rs. 50bn raised, another Rs. 10bn debentures investments in the pipeline
More than Rs. 50 billion has been raised through locally-offered debentures in the past 12 months with about Rs. 10 billion more to be raised before the year end, according to market analysts who say the appetite for these investments are in the rise.
“Mostly finance companies are raising money through debentures,” an analyst said.
The latest debenture to close was Bank of Ceylon (BOC), Sri Lanka’s biggest bank, which received offers of over Rs.20 billion for its 4-billion-rupee debenture issue.
The interest in debentures is mainly owing to the tax incentives, analysts say, while the declining interest rates in fixed income securities such as savings accounts and fixed deposits has also helped the attraction towards debentures. “Debentures provide higher rates of financial return and are usually much more rewarding than the other investments,” a second analyst said.
BOC said that the majority of the applications received were for 5 year and 10 year fixed rate categories. “Retail investors have shown interest on 5 year fixed category while insurance companies and pension funds were prominent among the investors who showed interest in long term (10 year) with bids totalling Rs. 11.6 billion which is more than 50 per cent of the total value of the applications received,” the BOC said in a statement.
Arpico Finance Company’s debenture issue of Rs 600 million was announced recently. The company said that 3,000,000 Rated, unsecured, redeemable debentures at an issue price of Rs 100 each (with an option up to issue up to further 3,000,000 debentures in the event the initial 3,000,000 debentures are oversubscribed) will be opened early next month.
comments powered by Disqus