Seylan launches 5 year debenture issue for Rs. 1 billion

Seylan Bank announced the issue of unsecured subordinated redeemable Debentures amounting to Rs. 400 million with an option to issue at the discretion of the Board, three further tranches of Rs. 200 million each in the event the issue is oversubscribed.

These debentures are listed on the main board of the Colombo Stock Exchange. The issue would be open for subscription from 10th December 2008.

However, investments in these debentures would be accepted at any Seylan Bank Branch during banking hours from now on.

Fitch ratings Lanka affirmed Seylan Bank's National Long Term Rating of BBB+ (LKA) and stable outlook, and assigned BBB (LKA) for its proposed unsecured subordinated redeemable debentures.

This Debenture Issue will boost the capital base of Seylan Bank and also help to comply with prudential requirements for capital adequacy.

The debentures offer attractive rates of interest to cater to the investing public for five years. Investors have the option of subscribing for debentures offering either a fixed rate of interest or a floating rate of interest.

A fixed rate option comprises of an annual interest rate of 21.5% per annum or a monthly interest rate of 20.5% per annum (Annual Effective Rate 22.5% per annum) The first floating interest rate option is based on the simple average of the three month weighted average Treasury bill rate (after tax) plus 2.5%, payable quarterly and the second floating interest rate option is based on the simple average of the one year weighted average Treasury Bill rate (after tax) plus 2.5%, payable annually.

Seylan debentures provide attractive rates of return to enhance the lifestyles of Sri Lankans.

These debentures offer the highest return in the market for 5 year investments. One could plan one's source of funds on a regular basis to meet monthly, quarterly and annual commitments by matching income from interest earned with envisaged recurring expenditure.

Seylan's Interest income on advances and interest earning assets grew by 25.16% over the previous year, and posted a growth of 20.84% in third quarter 2008 compared to third quarter 2007.

The Bank's Non Interest Income grew by 25% up to the third quarter and in the third quarter the growth over the previous year was 14.50% on a YOY comparison.

The Bank's net interest income grew marginally by 6.16% at the end of the third quarter, and in the 3rd quarter recorded a growth of 8.07% over the same period last year.

Operating in high inflationary and turbulent market conditions, the Bank and the group was able to restrict the increase in operating expenses to 17%, and 16% respectively, compared to the 3rd quarter 2007.

The total asset base of the Bank grew by 6.14% during the first three quarters over that of 31/12/2007 and gross loans and advances had a marginal growth of 3.71% reflecting the impact of the high interest rate scenario prevailing in the country.