Bond issue raises investor confidence
Sri Lanka’s five-year, $500 million bond offering has received orders
worth more than $1.25 billion, which was oversubscribed three times
over. The Government will obtain this loan at an annual interest of 8.25
per cent, Minister of State Revenue and Deputy Finance Minister Ranjith
“This was a victory for the Government and the people of Sri Lanka.
The money will be utilised especially for infrastructure development
projects such as such as the Galle Port, Upper Kotmale power generation
project and the Norochcholai power plant are some of projects,” Minister
Minister Siyambalapitiya said the Government would pay only the
interest for five years. “If we generated the
Minister of State Revenue Ranjith Siyambalapitiya addressing the
Picture by Sumanachandra Ariyawansa
fund out of Treasury bonds
the interest would have been higher than 18 per cent,” the Minister
said. Earlier this month, Sri Lanka said it was selling bonds to raise
funds for infrastructure projects.
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$500 million international bond issue.
The bond issue will be carried out by the Central Bank on behalf of
the Sri Lankan Government. This debut sovereign bond issue is also
expected to serve as a benchmark for other corporate borrowers in Sri
Lanka, which have the capability of raising money in international
With the receiving of this US$ 500 million, it would stabilise the
current rupee fluctuation, he said. The funds that will be mobilised
through the bond are to be used for financing the infrastructure
development programmes of the Government.
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.
President Federation of Chamber of Commerce and Industry (FCCISL)
Nawaz Rajabdeen said bonds are a must for a country like Sri Lanka to
accelerate the infrastructure development of the country. “This is not
being taken to fight the war,” he said.
He said that the fact that the bonds were internationally
oversubscribed itself shows investor confidence for the country.
“I am sad to note that senior politicians in the Opposition are
trying to take undue publicity from this,” he said.
Rajabdeen said that the success of the bond issue proves that the
international community has not taken them seriously.
Chairman Board of Investment (BoI) Dhammika Perera said the success
of the sovereign bonds is a clear indication of the investor confidence
for Sri Lanka. “The country needs these bonds to take their accelerated
development process forward” he said.
Minister of Investment Promotion Navin Dissanayake said the positive
response for the Government’s bond offer shows that Fund managers and
foreign investors have confidence in the Sri Lankan economy.
He said that when there was adverse publicity towards the bond offer
the country was able to gain a good response.