SDB Bank secures US$ 8mn BIO term loan

SANASA Development Bank PLC (SDB Bank) has secured a US$ 8 million loan from Belgian Investment Company for Development Countries NV/SA (BIO) to augment its capital buffers under Basel III guidelines and support its lending activities for small and medium-scale enterprises (SMEs). 

The unlisted, subordinated, five-year term debt with a non-viability conversion, which qualifies as Tier 2 capital, was successfully completed on December 24, 2019, SDB Bank said in a stock market disclosure.

The fund raising, which entails an interest rate of 6-month LIBOR + 550 basis points per annum, was approved by the bank’s shareholders at an Extraordinary General Meeting held on November 5, 2019.

The capital repayment of the financing facility will be at maturity, and interest payments will be made on March 1 and September 1 of each calendar year. The term loan would facilitate SDB Bank to raise its Tier 2 capital within the Central Bank-approved Rs.3.2 billion limit.

SDB Bank also intends to enter into a separate arrangement with a licensed commercial bank with a view to hedge the US dollar exposure of the term debt and thereby minimize any currency risks to the bank. 

NDB Investment Bank Limited (NDBIB) functioned as the Financial Advisors and Mangers to the fund raising.