Bank of Ceylon (BOC) has announced that it has received in-principle approval from the Colombo Stock Exchange (CSE) to list a new debenture issue designed to strengthen its Tier 2 capital base under Basel III guidelines.

The proposed issue includes subordinated, redeemable, five-year debentures with non-viability write-down features, in line with the regulatory requirements set out by the Central Bank of Sri Lanka.

The bank aims to raise up to Rs. 10 billion through the issuance of 100 million debentures, each carrying a face value of Rs. 100. In the event of an oversubscription, Bank of Ceylon reserves the right to issue an additional 50 million debentures, potentially increasing the total issue size to Rs. 15 billion.

Investors will have the choice of subscribing to either a fixed-rate or floating-rate instrument. The fixed-rate debentures will offer an annual coupon of 11.25%, while the floating-rate debentures will provide a return equivalent to the 12-month Treasury bill rate plus 1%.

Interest on both instruments will be paid annually over a five-year tenure.

The debenture issue is structured to be Basel III-compliant and includes loss absorption features to address non-viability scenarios.