Tuesday, 06 April 2021 17:17

UDA to issue Rs 25 bn debenture ten years after its first Rs10 bn issuance Featured

The Urban Development Authority (UDA) is issuing debentures worth Rs.25 billion to raise funds through state banks to finance a large- scale middle income housing scheme, a senior official said

Nimal Perera, Secretary to the Ministry of Urban Development and Housing, said that the first installment of Rs. 5 billion of this debenture issue is expected to be received sometime around next week.

5000 of these houses of large- scale middle income housing scheme funded by trhe debenture will be built in Colombo, Kandy and Anuradhapura and offered at up to Rs. 10 million for a 2-bed room apartment at a loan interest of 6.2 per cent interest with the repayment period at 30 years at Rs.37, 000 per month.

UDA’s previous Rs10 billion debenture issue in 2010 has created controversy due to cash flow problems in repayment of investments in maturity in 2015 although there was treasury gurantee at that time.

Several Local and foreign Investors who subscribed to UDA’s debenture issue ten years ago have been deprived of their investment due to cash flow problems of then government , informed sources said.

The Ports Authority, Bank of Ceylon, Sri Lanka Insurance Corporation, the National Insurance Trust Fund, Seylan Bank, Commercial Bank, Sampath Bank and HNB Assurance were among the local parties who invested on this UDA’s Rs.10 billion debenture issued in October 2010.

The UDA debenture was listed on the main board of the Colombo Stock Exchange (CSE) and it enables investors to liquidize their debenture before five years, UDA official said adding that no investor has resorted to it.

CITICORP Investment Bank Singapore limited has purchased the entire amount of Rs. 3 billion allocated for foreign investors, informed sources said adding that the money was channeled through the local branch of the CITI Bank.

The Ports Authority received Rs. 1.7 billion worth of debentures; The National Insurance Trust Fund a sum of Rs. 1.045 billion, HNB Assurance Rs.115.4 million Bank of Ceylon, and the Sri Lanka Insurance got Rs. 871 million each.

The 3 other Banks, Seylan, Sampath and the Commercial Bank each, received Rs. 435 million worth of debentures.

This Rs.10 billion debenture was issued with a maturity period of five years and at an interest of 11.0 percent per annum, 10 percent monthly or a floating rate of Treasury bill plus 75 basis points every six months.

The UDA has announced at that time that the money will be used to build 65,000 housing unit for unauthorized dwellers in 800 acres of high value state land in Colombo city. The plan was to use this land for commercial purposes.

 

An attempt of another Rs.10 billion debenture issue of UDA has been halted by the Securities and Exchange Commission in March 2015 as the authority has failed to submit its audited accounts of 2012 and 2013.

 

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