First Capital PLC to issue Rs.750mn worth of debentures

First Capital Treasuries Plc of Sri Lanka, a Primary Dealer, plans to build 750 million rupees in a debenture issue. The debentures will hold a maximum tenure of five years, with semi-annual interest payment options payable.

The debenture is due on January 27, 2020. First Capital Treasuries is a primary dealer licensed and appointed to deal exclusively in Government Securities by the Central Bank of Sri Lanka.

It has a capital base of 3 billion rupees and has [SL] A- (Stable) ranking from ICRA Lanka. First Capital Treasuries last sold 500 million debentures in 2015 with a 9.50 percent interest that matures on February 6, 2020.

First Capital Treasuries Plc Chief Trader, Anjelo Simmons, said the debenture issue would be used in part to enhance the capital adequacy and refinance maturing debentures. Treasury bonds maturing in 2025 traded on Thursday at around 9.60/70 percent.

The company is currently in a commanding position as the leading independent Primary Dealer with a capital base approaching Rs. 3 billion. First Capital Treasuries PLC is registered on the Colombo Stock Exchange and carries an [SL] A- (Stable) issuer ranking from ICRA Lanka Ltd.

The debenture issue jointly managed by First Capital Limited's Corporate Finance Division and People's Bank Investment Banking Unit, whereas Hatton National Bank PLC will act as Trustee to Issue. The debenture problem is classified [SL] BBB+ (Stable) by ICRA Lanka Ltd. Priced at face value of 100 each and listed on the Colombo Stock Exchange.

Part of the debenture issue's proceeds will use to fund the five-year Rs. 500 m maturing, Rated, Subordinated, Unsecured, Redeemable Debentures on February 6. Enhance the company's long-term financing base by allowing the company to minimize its maturity mismatch by obtaining long-term funding that will help the company to expand its core business.

First Capital Treasuries PLC posted income of Rs. 671 m after tax over the first half of the 2019/20 financial year. The prudent approach of the company to the Government Securities market is reinforced by the 360-degree insights provided by the First Capital Group through its Research arm to one of the few Fixed Income research units, as well as to other subsidiaries operating in Wealth Management, Stock Brokering, and Corporate Finance Advisory.

OSL Take: The latest report launched by the Central Bank of Sri Lanka highlights an essential area of focus in the next five years. The announcement that it would create investments worth Rs. Thirty billion within the next five years is a positive sign for foreign businesses/investors exploring business/investment opportunities in Sri Lanka. They could start exploring investment opportunities in the biodiversity restoration and management sector and even present to the government of Sri Lanka projects that could implement under the program.

Sri Lanka’s economic policies, along with the continuously improving ease of doing business environment, have helped promote the country as an ideal business/investment destination in the South Asian region. Therefore, the proposed issuance of debentures would offer a perfect investment opportunity for the discerning investor.

 VBS/AT/20200303/Z_TB4