PABC debentures

gamaya wrote:PABC announced its proposed listing of debentures.
Is this a way to acquire the minimum capital requirements imposed by Central Bank?

Experts please advice...

ud wrote:If the said debenture have feature like having a 5 year tenor and a bullet repayment, this debenture will form part of the tier 2 capital of the bank (Capital Adequacy requirements). Banks have two tiers of capital where the equity and reserves will be tier 1.

Debt capital has following features,
-A prior set charge (Rate is known)
-Tax shield (interest is allowed as an expense by tax)

and unless a company have exceeded the optimum level for debt, having debt will theoretically increase returns of the equity holders. Specially a lending business (bank, finance companies) where high gearing ratios prevail will earn higher returns for the equity holder.

I am not personally supporting debt funding as there are many cons in that regardless of whether it can be proven with theory.

WildBear wrote:These rates are not attractive at all, recently concluded SAMP debentures gave much higher return with better rating.

gamaya wrote:PABC announced its proposed listing of debentures.
Is this a way to acquire the minimum capital requirements imposed by Central Bank?

Experts please advice...

npp wrote:further to the above, see this

http://www.cse.lk/cmt/uploadAnnounceFiles/3041323426939_388.pdf

I remember seeing this back then but totally forgot about it. Seems that they were able to get a private placement for 750m but there was no announcement made. The only place to see this was the quarter reports.

If it is the same Japanese party, then seems as if they want to sell off fully or partly what they hold.

gamaya wrote:

npp wrote:further to the above, see this

http://www.cse.lk/cmt/uploadAnnounceFiles/3041323426939_388.pdf

I remember seeing this back then but totally forgot about it. Seems that they were able to get a private placement for 750m but there was no announcement made. The only place to see this was the quarter reports.

If it is the same Japanese party, then seems as if they want to sell off fully or partly what they hold.

So this means the banks Tier 2 capital remains unchanged. Its just a listing of existing debentures for buying and selling in the market?

npp wrote:

gamaya wrote:

npp wrote:further to the above, see this

http://www.cse.lk/cmt/uploadAnnounceFiles/3041323426939_388.pdf

I remember seeing this back then but totally forgot about it. Seems that they were able to get a private placement for 750m but there was no announcement made. The only place to see this was the quarter reports.

If it is the same Japanese party, then seems as if they want to sell off fully or partly what they hold.

So this means the banks Tier 2 capital remains unchanged. Its just a listing of existing debentures for buying and selling in the market?

yes. but correct me if i am wrong, but it's similar to listing of shares through introduction.
tier 2 capital may have changed when the debentures were actually issued