Sovereign Bond oversubscribed
Investor demand exceeds over USD 6 billion:
Sri Lanka finalized a USD 1 billion 10 year Sovereign Bond issue with
a coupon rate of 6.25 percent on Monday.
This was the third international sovereign bond offering, following
issues in 2007 and 2009. The offering attracted an order book that
exceeded USD 6.3 billion within 14 hours of opening on September 27
2010, thereby being over-subscribed by more than six times. This clearly
underscores the high global investor confidence based on the recent
progress and the future prospects in Sri Lankan economy since the end of
the conflict in the country, the Central Bank said yesterday.
Governor
pleased
Central Bank Governor Ajith
Nivard Cabraal said they are extremely pleased with the
outcome of the sovereign bond issue of US $ one billion.
“This demonstrates that the country has been well recognized
among the global investors.”
“Sri Lanka is now an
emerging star in the global financial landscape,” the
Governor said. (CdeS) |
Orders were received from 362 investors globally. By geographic
distribution, 52.5 percent of the bonds were allocated to investors in
the United States, 25 percent to investors in Europe and 22.5 percent to
investors in Asia.
By investor type, 85 percent of the bonds were allocated to Fund and
Asset Managers and the balance to Pension Funds, Insurance companies and
banks.
The Offering is of 144A / Reg.S format and the bonds will mature in
October 2020.
The bonds are rated B+ by two international rating agencies, Standard
and Poor’s and Fitch Ratings and will be listed on the Singapore
Exchange.
The current coupon rate of 6.25 percent for the ten year sovereign
bond is significantly lower than the cost of borrowings as compared to
previous two international offerings in 2009 and 2007.
The Government will use the proceeds from the bond issue to finance
its current infrastructure and to restructure a part of the existing
debt stock of the government to improve overall public debt management.
Bank of America Merrill Lynch, Royal Bank of Scotland and Hong Kong and
Shanghai Banking Corporation functioned as Joint Lead Managers and Joint
Book Runners of the offering, while Bank of Ceylon participated as
Co-Manager.
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