Govt achieves success with HSBC deal:
US$ 500 m sovereign bond issue oversubscribed
The five-year US Dollar sovereign bond issue offered by the
Government has received more than US$ 1.25 billion orders overshooting
the target by more than 200 per cent, reflecting investor confidence in
the island’s US$ 26 billion economy.
While the bond issue was for US$500 million, the orders received so
far have crossed US$ 1.25 billion, news agencies reported.
The issue is rated B-plus by Standard & Poor’s and managed by leading
international banks HSBC, Barclays Capital and J P Morgan.
The Government has offered to pay a yield of 8.25 per cent for the
The pricing and size were in line with initial guidance.
When the Government announced the sale of bonds to raise funds for
infrastructure development projects, it came under heavy criticism from
After issuing a statement in Parliament against the bond issue, the
UNP organised a protest rally in front of the HSBC Bank urging the Bank
not to grant loans to the Government. UNP leader Ranil Wickremesinghe
wrote to the HSBC threatening that any future UNP Government would not
only refuse to repay the loan but also cancel the Bank’s license.
“In spite this threat and other pressure tactics, investors have
expressed total confidence in the economy,” analysts said. “This is an
endorsement of the sound economic and financial policies of the
Government and a boost for investments because this will be considered a
clear indication of international confidence,” they said.
The Central Bank of Sri Lanka said it has selected J.P. Morgan,
Barclays Capital and HSBC as Joint Lead Managers/ Bookrunners/
Underwriters to the US$500 million international sovereign bond issue.
The bond issue will be carried out by the Central Bank on behalf of
the Government. This debut sovereign bond issue is also expected to
serve as a benchmark for other corporate borrowers which have the
capability of raising money in international capital markets.
This US $ 500 million would also stabilise the current rupee
fluctuation, Central Bank sources said.
The funds that will be mobilised through the bond issue are to be
used for financing the infrastructure development programmes of the
The three lead managers were selected after the Central Bank invited
proposals from selected banks/investment houses on July 2. In response,
12 international banks and investment houses submitted their proposals
and made presentations out of which three were selected.