Country's capital market will rise

Sri Lanka's capital market will develop in the near future as the country is now stable, while investor confidence is growing, said Bank of Ceylon (BoC), Chairman Razik Zarook at the launch of the Rs. 4 billion long-term BoC debenture issue in Colombo last week.

Responding to a query on issues in Sri Lanka's capital market, liquidity and secondary market issues of debentures, he said that there is development in the capital market and new instruments and new investors are coming in and, therefore, intervention in the market is not necessary.

The BoC debenture issue which opens tomorrow and is one of the largest debenture issues of any commercial bank in the country.Senior Deputy General Manager, International, Treasury and Investment of BoC, P.A. Lionel said that according to market investigations the debenture will be oversubscribed by 200% and the bank expects over Rs.15 billion in subscriptions mainly from local institutional investors.

“We encourage individual subscribers too to invest but the main subscribers will be the corporates with excess liquidity,” he said.He said that this debenture issue will portray BoC's strength, increase its tier-two capital and help to fulfill the long-term financial needs of the bank and invest in long-term projects such as infrastructure development of the economy. Investors know our strength and we are the number one commercial bank in the country in all criteria, we have an over one trillion asset base and our two recent bond issues were also oversubscribed by eight times and six times, he said.

This unsecured, subordinated and redeemable debentures have maturity periods ranging from 5-10 years. The debentures have been rated AA (Lanka) by Fitch Ratings (Lanka) Ltd.This issue is an opportunity for the public to invest their money at minimum risk in the present volatile market. The Rs. 4 billion issue with an option to increase it to eight billion in the event of over-subscription, consists of nine debenture types of various fixed and floating coupon rates with tenors between 5-10 years.

This is an ideal investment option for long term investors concerned over interest rates. Another advantage of investing debentures is that they are exempt from withholding and corporate taxes, Lionel said.