Sri Lanka’s Sampath Bank to sell 16.5-pct bonds

Oct 01, 2012 (LBO) - Sri Lanka's Sampath Bank is selling 16.

5 percent 5-year public listed bonds to boost its regulatory capital with a floating rate and monthly interest paying alternatives also available. The bond will be subordinated to deposits, meaning they will rank lower in repayments in case of liquidation.

According to a prospectus, the bank will sell 1.5 billion rupees in bonds with the option for a further 1.0 billion rupees if there is more demand.

Sampath Bank is offering bonds that will pay 16.5 percent at the end of each year, 15.

0 percent interest paid every month (16.08 percent annual effective rate) and floating rate bonds.

The floating rate debentures will pay 2.

0 percent above the gross (before the withholding tax deduction) 6-month Treasury bill yield.

In Sri Lanka a 10 percent tax is levied on interest on bonds and deposits at source.

The bonds are coming to the market at a time when Sri Lanka is emerging from a balance of payments crisis and interest rates are tipped to fall if the state manages not to deficit spend excessively.