State-run Bank of Ceylon to raise US$ 100 mn syndicated loan

January 8, 2007 (LBO) – Sri Lanka’s state-run Bank of Ceylon plans to tap the international capital markets early this year to raise 100 million dollars via a three-year syndication loan, a senior official said. The deal, arranged with sole bookrunner HSBC, was earlier scheduled for late last year. Bank of Ceylon was forced to pull out, after it emerged that Citigroup was also raising 100 million dollar three-year syndication on behalf of the Sri Lankan government at the same time.

“We are now looking at late February or March to raise the money,” Bank of Ceylon’s Chief Executive/General Manager, S N P Palihena told LBO.

Bank of Ceylon, Sri Lanka’s biggest state owned lender in terms of assets, tapped international capital markets in September 2005, to borrow 130 million dollars via two-year syndication (with a one-year put option) at 74 basis points above the London interbank offered rate of LIBOR.

The bank usually re-lends its dollars to the government, and analysts expect the proceeds of this loan to also go to the Treasury.

Sources close to the deal declined to say the exact use of the funds, but it is believed that most, or all of it, would go to the government.

Being Sri Lanka’s largest commercial bank, Bank of Ceylon also finances Ceylon Petroleum Corporation.