Sri Lanka wins deal of 2010 The Banker award

The Sri Lankan Government's first international debt issue of US $500m bond won the deal of the year 2010 award by The Banker.

Following the end of its 26-year civil war in May 2009, the Sri Lankan government has been eager to kick-start redevelopment and build a foreign investor base.

In order to raise finance to fund its expansive post-conflict reconstruction program, the Sri Lankan government launched its first international debt issue of US $500m in five-year bonds in October 2009, The Banker website said.

Despite the overwhelming popularity of the issue, pricing the bonds proved a challenge: the country's outstanding bonds, executed in 2007, were highly illiquid, and while the market conditions at the time were broadly strong, the environment remained volatile.

Following initial price talk of eight percent, however, the issue was priced at 7.4 percent, well below the Sri Lankan government's initial target coupon, with a final order book of more than $6.8bn.

At 13 times oversubscribed, the bond sale proved a huge success for an infrequent sovereign issuer amid untested investor appetite and has served as a major showcase for Sri Lanka, setting the stage for future issues, website said.

The Banker's judges considered 485 deals from more than 100 banks, with many breaking new ground, in new markets, for new names.