US$ 1b sovereign bond for infrastructure, retiring debt

Ravi LADDUWAHETTY

The government will launch the US$ 1 billion Sovereign Bond Issue next week, which will be to raise funds for the development of infrastructure and part retirement of the public debt.

Central Bank and Treasury officials are making arrangements for the execution of the $ 1 billion Sovereign Bond Issue.

The Central Bank will formally announce the issue next week, Deputy Governor Dharma Dheerasinghe told the Daily News yesterday.

The major international banks and financial houses are expected to pick up the issue with the announcement which will also be followed by road shows in London, Boston, Los Angeles, Singapore and Hong Kong next month, he said.

"This will also make the case for Sri Lanka given the positive benign macro-economic fundamentals in the country following the completion of the war against terrorism," he said

The $ 1 billion bond issue which was issued last year at 6.25 percent was very successful with 350 international investors injecting their funds and that included some of the most prestigious banks and financial houses.

Dheerasinghe said this was the most effective way of raising funds in sharp contrast to concessionary financing, where the cost of the finance adds up to 10 to 15 percent when the arrangement fees and the insurance covers are paid for which makes it more expensive.