Singer Sri Lanka’s debenture issue falls victim to rate volatility

The Rs.1.5 billion debenture issue of the consumer durables retail giant Singer Sri Lanka PLC yesterday became the latest victim of the exchange and interest rate volatilities afflicting the island nation’s economy and causing investors to panic. 

The debenture issue, which officially opened yesterday, was able to attract only nine applications worth of Rs.641.5 million and the company said the issue would be closed today (26th) as per the prospectus. 

Market sources said the pulling out of several investors lined up at the last minute due to current exchange and interest rate volatilities was the key reason behind the under-subscription of the issue.  

Usually, orders for these types of debentures are pre-placed. 

NDB Investment Bank functioned as the financial advisors and managers to the issue.  

Singer Sri Lanka issued listed, rated, unsecured, senior redeemable 3-year debentures amounting to Rs.1 billion with an option to raise a further Rs.500 million in the event of oversubscription of the initial tranche. 

Debenture carried a fixed coupon rate of 12 percent p.a., payable semi-annually. 

The rupee so far this year has depreciated almost 10 percent against the dollar, and the rupee is expected to be under pressure due to year-end seasonal dollar demand from importers.

Also, there is expectation in the market that the Central Bank may resort to increase policy rates at the next monetary policy review to discourage foreign outflows from government securities market. 

Sri Lanka has suffered a net outflow of Rs.64 billion in securities so far this year.