Bank of Ceylon to raise Rs10bn through debenture offering

Bank of Ceylon has announced plans to raise Rs10 billion via a debenture issuance, marking a capital-raising move by the island's largest state-owned commercial bank. The debentures will carry a floating rate structure, providing investors with returns calculated as the 12-month Net Treasury Bill rate plus an additional 2.00 per cent per annum.

The floating rate mechanism ties investor returns to prevailing Treasury Bill yields, offering a variable income stream that adjusts periodically based on short-term government borrowing costs. This structure provides investors with built-in protection against interest rate fluctuations while maintaining a consistent spread above the benchmark rate.

The capital mobilisation through debentures forms part of the bank's strategy to strengthen its capital base and fund operations. Debenture offerings have become an increasingly common funding tool for Sri Lankan financial institutions seeking to diversify their capital sources beyond traditional deposits and loans.

The Bank of Ceylon's move comes amid the broader financial sector's efforts to maintain adequate capital ratios and support lending operations. The debenture sale is expected to attract both institutional and retail investors seeking fixed-income investment opportunities in the local market.