2 April 2021 09:05 am Views - 431
State-owned power utility Ceylon Electricity Board (CEB), which is the country’s monopoly electricity transmitter and distributor, is gearing to raise up to Rs.20 billion through a listed debenture issue on the Colombo Stock Exchange (CSE).
The CSE, in a brief statement yesterday said it has approved an application by the CEB to issue senior unsecured listed redeemable rated debentures at an issue price of Rs.100 amounting to a potential capital raising of up to Rs.20 billion.
The debentures will be issued for period of five years with a fixed coupon interest rate of 9.35 percent p.a. (AER 9.35 percent) to be paid annually. The issue will open on April 8, 2021.
The initial issue will consist of 100 million debentures with an option to issue up to a further 100 million debentures at the discretion of the CEB in the event of an oversubscription of the initial Issue. This will pave the way for CEB to raise Rs.10 billion in capital initially with an option to raise a further Rs.10 billion subsequently.
The debentures carry a rating of AA- (lka) by Fitch Ratings Lanka Limited while CEB is rated as AA-(lka) with a Stable Outlook by the same rating agency.
State-owned People’s Bank, the country’s second largest commercial bank in terms of assets, is the Manager, Banker and the Trustee to the debenture issue.
“@PBSriLanka is proud to be the Banker, Manager, and Trustee for @CEB_lk 5-yr listed debenture issue up to LKR 20bn. This is also the biggest ever trustee deal to to-date by any financial institution in #SriLanka,” People’s Bank General Manager/CEO Ranjith Kodituwakku said in a tweet.
Commenting on the issue CSE CEO Rajeeva Bandaranaike stated, “We are pleased to note that CEB is opting to finance its capital requirements through the Sri Lankan stock market. This once again demonstrates the confidence placed in the Sri Lankan stock market by both private and State institutions as an effective and efficient source of capital raising. We welcome other State institutions to strongly consider the Sri Lankan stock market as a vehicle to finance growth and development.”
CEB, which accounts for about 75 percent power generation in the country, is expected to invest heavily on new generation capacity and the upgrade of transmission network to meet the country’s growing electricity demand, which the electricity sector regulator, Public Utilities Commission of Sri Lanka (PUCSL) expects to rise by 6 percent per year in the medium term. The government is considering increased private-sector participation in developing the power sector, but according to Fitch Ratings Lanka, CEB will continue to play an active role, which would require material capital outlay.