Cheap Cuts

Bank of Ceylon picked up Rs. 250 mn worth of leased backed paper, locking returns for up to four-years. Bank of Ceylon picked up Rs. 250 mn worth of leased backed paper, locking returns for up to four-years. People’s Leasing Co. (PLC) issued the lease-backed securities in the form of a direct loan as a cost effective method to feed a growing leasing portfolio.

PLC said that state-run Bank of Ceylon was comfortable to opt for a longer tenure – priced at the prime lending rate (presently nine percent) plus a small premium – at a time when most buyers were looking to invest in short-term paper.

“It’s not a securitisation as such as we have eliminated the need of a Trustee and the fees that go with it. We have pledged our four year receivables to BOC and got a loan in return,” explains Udesh Gunawardena Deputy Finance Manager, PLC.

Todate, PLC has raised over a billion rupees from the market to feed its leasing business. Gunawardena says for the first six months of this financial year, PLC’s leasing portfolio has swelled to Rs. 12.2 bn. The portfolio stood at Rs. 7 bn in 2002/3 and Rs. 11 bn in 20