Development Bonds oversubscribed by over 150 per cent

The Central Bank of Sri Lanka, on behalf of the Government, offered to issue Sri Lanka Development Bonds to eligible investor categories for subscription at a rate of US Dollar six month LIBOR plus a margin to be determined through competitive bidding.

The Bonds on offer amounted to US$ 125 million for a two year maturity period, US$ 50 million for a three year maturity period and US$ 25 million for a five year maturity period.

The offer was opened on June 16, 2008 and closed on June 23, 2008, and was subscribed by both foreign and local commercial banks.

The total bids received amounted to US$ 310 million, of which the Government has decided to accept US$ 230.3 million of two year SLDBs at the market determined rate of US$ six month LIBOR + 2.9492 per cent (weighted average margin). Today, the US$ six month LIBOR rate is 3.180 per cent.

This SLDB issue is within the annual borrowing limit approved by Parliament for 2008 and the funds mobilised through this bond issuance are to be used to settle the SLDBs that are maturing this year.

The SLDBs are transferable by endorsement, delivery and registration with the Superintendent of the Public Debt of the Central Bank of Sri Lanka.

Eligible investors can purchase SLDBs from designated agents appointed by the Central Bank in the secondary market.