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| Sunday, 1 September 2002 |
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| News Business Features Editorial
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HNB debenture issue opens on Sept. 3 Hatton National Bank Limited (HNB) has announced a debenture issue for a maximum of 20 million unsecured subordinated redeemable debentures of a par value of Rs. 100. HNB has become the first corporate to issue a quoted debt instrument with a maturity of 10 years. Six types of debentures are on offer with fixed or floating options. Interest will be paid semi-annually. See Table for the interest rate options. This debenture issue is in preparation for the one per cent increase in the minimum capita adequacy ratio requirement in January 2003 to 10 per cent from the present nine per cent. To meet this capital adequacy requirement, the capital base of the bank has to be increased to support the risk assets. Therefore, the main objective of the issue is to raise the supplementary capital (Tier II) of the bank (from the present nine per cent to 10 per cent after the debenture issue). The long-term funds raised through this issue will be utilized to finance the expected long-term lending opportunities for HNB in infrastructure development and project finance activities, arising from a recovery of the Sri Lankan economy and the future expected expansion of the housing loan and leasing portfolios. In addition the issue will afford the public an opportunity to participate in an alternate fixed income investment and facilitate the admission of a maximum of 20 million debentures to the official list of the Colombo Stock Exchange (CSE). The Central Bank of Sri Lanka and the CSE have approved the issue and the debentures will be listed on the CSE. Fitch Ratings Lanka Ltd has rated the senior debt of HNB as SL A. This rating denotes high credit quality and a low expectation of credit risk. The issue, which opens on September 3, will close on September 23 or on the day it is oversubscribed. |
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