Sri Lanka Stock Picks

Sri Lanka stock picks site has been developed to give first hand information with regard to share trading opportunities available for investors who do not like go through lengthy research reports, calculations,etc but to have a clear idea about stocks that have future up side potential.Our service is just not for day traders but for the investors who wish to see their money growing in the long run.Our main objective is to provide information relating to trading under one roof.

Thursday, July 7, 2011

New wave of corporate debt to touch CSE

By Jithendra Antonio

While several licensed commercial banks are vying to raise money through right issues,
a new wave of corporate finance options have started to hit the Colombo Stock market from last week.

Several analysts and regulators are of the view that Sri Lanka’s corporate debt market needs more development. Several medium to long-term debt instruments which are listed debentures, will come to hands of Lankan investors during the next couple of weeks, market analysts outline.

Earlier this month, Bartleet Finance Limited (BFN) 2.04 million 13% Fixed Rate Debentures (payable monthly) were listed on the Colombo Stock Exchange’s Debt Securities Main Board.

The rated unsecured redeemable debentures 2010/2011 are Rs. 100 each and were listed via an introduction. Abans Financial Services (AFSL) said the company had also decided to issue listed unsecured debentures to the value of Rs.500 million with a tenor of 3 to 5 years at Rs.100 each in different classes. The rates are said to be in the range of 11.39% to 13% payable monthly or annually. It further said, in an event of oversubscription the company may increase the maximum debenture issue to Rs.1 billion.

Meanwhile, LOLC in a filing to Colombo Bourse said yesterday that it will be issuing unsecured listed debentures up to a value of Rs. 1 billion and a further unlisted debenture of Rs.500 million. The notice said that the proposed senior, unsecured redeemable, rated debentures will be for tenures of 4 years and 5 years and will carry semi annual interest coupons of 11.7% to 11.9%.

In another development, the proposed Rs. 1 billion subordinated debenture of the DFCC Vardhana Bank ranges from 5 to 7 years and will have both fixed and floating coupon rates and the capital will be re-paid on maturity.

The move comes at a time when several companies being unable to raise money via rights issues due to fears of loosing control or inability of the majority shareholders to infuse new capital.

These debenture issues are likely to carry interest rates ranging from 10% to as high as 18% per annum, depending on the ratings each of the debentures would receive from the rating agencies prior to the issues.

Analysts are of the view that the proposed debt instruments are likely to take away funds further from the currently depressed Colombo stock market, which has already been affected by a significant number of IPO’s and rights issues during the year.

source - www.dailymirror.lk