Siyapatha Finance Rs.2.5bn debenture issue oversubscribed

Sampath Bank PLC’s fully-owned subsidiary and the licensed finance company, Siyapatha Finance PLC’s Rs.2.5 billion senior debenture issue was oversubscribed on the opening day (September 8), the company said in a stock exchange filing.
The company issued 25 million debentures at Rs.100 each in two tranches—20 million and five million.  
The issue had received a final rating of A- with a ‘negative’ outlook from Fitch Ratings Lanka Limited. 
The proceeds will be used to fund its lending growth, lengthen its maturities of its liabilities and reduce structural maturity mismatches. 
The issue has bullet principle repayment – three year-tenor with 13 percent fixed interest rate paid annually and five-year tenure with a fixed rate of 13.5 percent paid annually. 
The company has been planning to issue the debenture since the beginning of the year but had waited for over six months probably to take cues from the direction of the interest rates.  This is the second such debenture by Siyapatha as the company raised Rs.1 billion in a debenture issued in December 2014 at 8.9 percent yield. 
According to Fitch Ratings, Siyapatha has a limited role in Sampath Bank’s core business as the former accounts for just 7 percent of total group advances as at end-2015. 
The contribution to group profit has also averaged 5 percent during 2012 to 2015. 
During the six months ended June 30, 2016, Siyapatha made a net profit of Rs.147.8 million narrowing 19 percent from a year ago. For the June quarter, the net profit slipped 5 percent to Rs.Rs.79.7 million from a year ago as rising interest cost started pinching the margins. 
During the six months loans and receivables have grown by Rs.2.3 billion to Rs.15.8 billion. 
The company has a deposit base of Rs.2.9 billion, which rose by Rs.1.7 billion during the six months. 
The company has a balance sheet of Rs.17.3 billion as of June 30, 2016.