Solidifying its position as a leader in sustainable finance, DFCC Bank has emerged as the first institution in Sri Lanka to issue a Senior, Rated, Unsecured, Redeemable Green Bond. This landmark move underscores its commitment to fostering environmental stewardship and promoting renewable energy. Subject to receiving approval, this historic bond issue will soon be made via an Initial Public Offering and listed on the Colombo Stock Exchange. It thus represents a significant boost for the nation’s solar energy sector, as the proceeds are earmarked exclusively for renewable solar energy projects that generate substantial environmental benefits.
Thimal Perera – Chief Executive Officer (CEO) of DFCC Bank – remarked on the occasion’s significance, saying, “This milestone underscores our commitment to sustainability and marks a pivotal moment for Sri Lanka’s financial sector. With this first issue of a Green Bond, we are creating a new avenue for responsible investment – an initiative that aligns with our long-term vision of fostering economic growth through environmentally sustainable practices. By supporting the solar energy sector with this issue, we invest in a cleaner, brighter future for future generations. We invite the public to consider subscribing to DFCC Bank’s Green Bond issue and supporting our shared vision for a green economy while securing a substantial return on their investment.”
The initial public offering of DFCC Bank’s Green Bonds is expected to raise up to LKR 2.5 billion, with an initial issue of LKR 2 billion and an option to raise an additional LKR 500 million in the event of oversubscription. The price per bond is set at LKR 100/-, and the minimum subscription requirement is set at 100 bonds or LKR 10,000/- or multiples thereof. The bonds are classed as Type A, with a tenure of 03 years and a fixed interest rate of 12.00% per annum, with annual interest payouts and a bullet capital repayment at the end of the bond’s tenor.
The bonds have received, from Fitch Ratings (Lanka) Limited, an Instrument Rating of A- (lka), which is further backed by DFCC Bank’s Issuer Rating of A- (lka)/Stable. The Issue is Managed by Acuity Partners (Private) Limited and Capital Alliance Partners Limited, with the Trustee to the Issue being People’s Bank, while the Independent External Reviewer to the Issue is KPMG, and the Lawyers to the Issue are Nithya Partners. The Asian Development Bank assisted in the development of the Green Bond Framework.
The Colombo Stock Exchange has significantly facilitated the trading of these Green Bonds, which it classes as “innovative financial instruments where the proceeds are invested exclusively in green projects that generate climate or other environmental benefits, for example in renewable energy, energy efficiency, sustainable waste management, sustainable land use (forestry and agriculture), biodiversity, clean transportation and clean water.” Meanwhile, the bonds will be traded and settled in a manner identical to conventional bonds to ensure consistency and convenience for investors.
DFCC Bank’s pioneering role in issuing Green Bonds is a natural extension of its long-standing dedication to sustainability, dating back to the 1990s when it financed Sri Lanka’s first private sector grid-connected mini-hydro power project. Since then, the Bank has been instrumental in pioneering the financing of other renewable energy technologies such as wind, solar and waste-to-energy. Sri Lanka’s first Green Bond reinforces DFCC Bank’s status as the pioneer in green finance.
Further underscoring these commitments, DFCC Bank is also the first, and presently the only, entity in Sri Lanka to have received accreditation from the Green Climate Fund (GCF), granting it access to concessionary funding worth USD 250 million to support climate mitigation and adaptation projects across the Island. Accordingly, DFCC Bank is collaborating with diverse stakeholders to drive Sri Lanka’s economy towards sustainable growth by ensuring its business model and strategic initiatives as a responsible corporate citizen push towards a greener and more sustainable future for all Sri Lankans.
For more information about DFCC Bank’s Green Bond Issue, please contact Channa Dayaratne, Vice President—Treasury and Investment Banking, at 0112442031/ 0777952695.