Lanka Rating Agency has assigned a financial institutional rating of AA3 and a short term rating of L1 to MBSL in the year 2007.The debenture issue received AA3 instrument rating from Lanka Ratings Agency.

Due to the unprecedented growth the bank plans to increase its lending portfolio and retire borrowings falling due within the year. The debenture issue is aimed at achieving the above mentioned objectives which would further strengthen the Bank’s performance. The issue will raise LKR 300 million, with an option to issue up to a further LKR 300 million in the event the issue is oversubscribed.

Merchant Bank of Sri Lanka Limited which formed a strategic alliance in the year 2005 with SBI Capital Markets Limited of India is presently involved in Corporate Advisory Services, Capital Market related activities, Investment & Fund Management services, Leasing, Trade Finance, Company Secretarial & Registrar’s services. The company has diversified into finance company activities through Merchant Credit of Sri Lanka Limited and stock broking through Lanka Securities (Private) Limited. In this backdrop, MBSL will persistently focus to stay competitive in today’s market place and to sustain a competitive edge with an end objective of generating better shareholder returns under challenging and changing environment. In order to overcome the competition, the key operational initiatives being pursued are to invest in core operating sectors, explore and pursue new diversification opportunities, emphasize more on broad based funding sources and to further improve client servicing capacity. The major factor contributing to the performance of the fee-based activity is highly dependent on the prevailing macro economic & socio environment. The condition currently prevalent has benefited the bank in positioning itself as a key player in the industry.

MBSL is driving rapidly its core income earner, leasing & hire purchase portfolio targeting mainly on the Small & Medium sector. As personal loans are becoming popular among the middle and upper society of Sri Lankans, to be aligned with the growing demand MBSL too has commenced to grant personal loans. With a view to diversify its revenue composition and to boost its profitability by capitalizing the high demand for property development projects MBSL is now seeking the opportunities in property development projects.

The unlisted AA3 rated debenture issue requires minimum investment of LKR 10,000 and can invest any amount in multiples of LKR 10,000. The issue opens on 19 April 2007 and will close on 26 October 2007 or on the day it is oversubscribed. An investor has a selective choice of fixed annual effective rate of 16% or can choose a floating annual rate of 3% above the 1-year Weighted Average Treasury Bill Rate (before withholding tax). The floating annual interest rate has a maximum of 17% and a minimum of 13%. The floating rate would produce a higher yield if the interest rates were to go up, while the fixed rate would be more attractive if the interest rates were to come down both options are attractive under the present market rate scenario. The prospective investor has to specify the desired interest option and payment period at the time of application.

Interest will be based on the par value of the debentures and paid every 6 or 12 months during the 3 year period. Fixed interest rates for bi-annual payments are based on an annual effective rate of 16%.

An investor is entitled for several benefits by being part of this issue of value such as regular returns either annually or bi annually on attractive fixed and floating rates, Possibility of investing for 03 years, loans upto 80% can be obtained securing the Debenture Certificate at MBSL, backed by the strength of the parent company Bank of Ceylon, who has 76% shareholding, a rated instrument with AA3 by Lanka Rating Agency indicating stability with low risk portfolio, transferability of the Debenture to any desired person intended, opportunity to realize capital gains with the fluctuation in the money market through private transfers.

Applications are invited for the subscription of debentures from, Citizens of Sri Lanka who are resident in Sri Lanka, Corporate bodies and societies including approved provident funds, Trust Funds and contributory pension schemes registered / incorporated / established in Sri Lanka and authorized to invest in debentures. Applications will not be accepted from individuals under the age of 18 years or in the name of sole proprietorships, partnerships, unincorporated trusts or non-corporate bodies.

A prospective investor can obtain detailed information pertaining to the debenture issue from the Prospectus. Prospectus and Application Form can be downloaded from MBSL website www.mbslbank.com or collected from MBSL head Office or branches.

This issue of value would enhance undiminished growth of the bank while ensuring above average secure returns to the debenture holder. The debenture holders not only reap a bumper harvest on their investment, they also become a part of the success story of an indigenous Merchant Bank.