Laxmi Sunrise Bank to Launch NPR 3 Billion Debenture Issuance, Offering 7% Annual Return

Laxmi Sunrise Bank Limited (LSL), a prominent commercial bank in Nepal, is set to open its much-anticipated "7% Laxmi Sunrise Debenture 2092" for public subscription starting Shrawan 14, 2081 (July 30, 2024). This significant offering aims to raise NPR 3 billion through the issuance of 3 million units of debentures, each with a face value of NPR 1,000. The debentures promise an attractive annual interest rate of 7% over a tenure of 10 years, providing a stable and predictable income stream for investors.

This debenture issuance represents a strategic move by Laxmi Sunrise Bank to bolster its capital base and diversify its funding sources, crucial for supporting its continued growth and expansion initiatives in Nepal's dynamic financial sector. Debentures, as a form of debt instrument, allow the bank to raise long-term capital from the market, which can then be deployed for various lending activities, thereby contributing to the nation's economic development. For investors, particularly those seeking fixed-income opportunities with relatively lower risk compared to equity investments, these debentures present a compelling option.

The allocation structure for the debenture issuance is designed to cater to both institutional and retail investors. A substantial 60% of the total issue, amounting to NPR 1.8 billion (1.8 million units), has been earmarked for private placement. The remaining 40%, or NPR 1.2 billion (1.2 million units), will be made available to the general public. Furthermore, within the public offering, 5% of the units, equivalent to 60,000 debentures, have been specifically reserved for mutual funds, encouraging broader participation from collective investment schemes.

Individual investors interested in participating in this offering can apply for a minimum of 25 units, translating to an investment of NPR 25,000. There is no upper limit for applications, allowing investors to subscribe for the maximum available units. The application window is scheduled to close early on Shrawan 19, 2081 (August 4, 2024), but may extend until Shrawan 28, 2081 (August 13, 2024), depending on the level of subscription. Investors are advised to apply promptly to secure their allocation.

Machhapuchhre Capital Limited has been appointed as the issue manager for this debenture offering, overseeing the entire issuance and sales process. Prospective investors can conveniently apply for the debentures through the C-ASBA system, accessible via approved banks and financial institutions, their designated branch offices, and the 'Mero Share' online platform developed by CDS and Clearing Limited. This streamlined digital application process ensures ease of access for a wide range of investors across the country.

In terms of creditworthiness, CARE Ratings Nepal Limited has assigned an "CARE-NP Triple B Plus (Issuer Rating)" to Laxmi Sunrise Bank for this debenture issuance. This rating signifies a moderate degree of safety regarding the timely fulfillment of financial obligations. While it indicates a reasonable capacity to meet debt commitments, investors should always consider their own risk appetite and conduct due diligence. The interest earned on these debentures will be paid semi-annually, after the completion of the first and second half of each fiscal year, with applicable taxes deducted at source.

Laxmi Sunrise Bank, formed from the successful merger of Laxmi Bank and Sunrise Bank, stands as a robust entity in the Nepali banking landscape. This debenture issuance is a testament to its commitment to sustainable growth and its ability to attract long-term capital. For investors looking to diversify their portfolios with a fixed-income instrument offering a competitive return and backed by a reputable financial institution, the "7% Laxmi Sunrise Debenture 2092" presents a noteworthy investment opportunity.