Govt. hoping to raise funds by bond offering

COLOMBO: The Finance Ministry confirmed yesterday that the Government is hoping to raise funds by way of a bond offering in the international capital markets, for which Barclays Capital, HSBC and JPMorgan have been appointed as joint lead managers and book runners.

The Bank of Ceylon will act as a co-manager to this issue under the joint lead managers. These joint lead managers were selected by the Monetary Board of the Central Bank of Sri Lanka (CBSL), on behalf of the Government, after range of proposals from leading international and local financial institutions were evaluated by a technical committee comprising senior officials of the CBSL and the Finance Ministry.

The Government intends to use the proceeds of the bond offering to supplement available concessionary funds to develop infrastructure projects that have previously been approved by the Government and included in the 2007 Budget.

The Government is of the view that these projects are essential for encouraging both domestic and foreign investment in the economy to achieve a higher and suitable growth in the longer-term, create more employment, raise income levels and alleviate poverty.

This bond issue is expected to establish a reference point or a benchmark for the private sector in Sri Lanka to access international capital markets as well.

Many sovereign nations have accessed the international capital markets over recent years, as a means of diversifying their funding sources, as well as raising the profile of their economies with international investors. From Asia, this includes sovereigns such as Indonesia, Philippines, Thailand, Vietnam and Pakistan.

The gross borrowing limit of the Government as approved by Parliament for 2007 is Rs. 655 billion and the proposed international bond issue would be well within such overall annual borrowing limit.

The Foreign Loans Act empowers the President to approve any foreign borrowing and those condition have also been diligently adhered to. Sri Lanka has a record of honouring its international debt obligations since independence in 1948 and the Government fully intends to maintain this record.