SLDBs US $ 150 m issue oversubscribed by 1.5 times

The Central Bank's issue of Sri Lanka Development Bonds (SLDBs) US $150 million was oversubscribed by 1.5 times with the total bid received amounting to USD 229.02 million. The Central Bank, on behalf of the government, offered to issue Sri Lanka Development Bonds (SLDBs) of US $ 150 million in three year tenor to eligible investors for subscription at a rate of US $ 6 month LIBOR plus a margin to be determined through competitive bidding.

The offer was opened from June 18 to 25 for bidding with the settlement on July 2. Both foreign and local commercial banks subscribed bids at the auction. The offer was oversubscribed by 1.5 times with total bid received amounting to US $ 229.02 million.

In view of the high demand by the investors, the government decided to accept US $ 229.02 million in 3 year maturity at the market determined rates of US $ 6 month LIBOR + 410 bps (weighted average margin). Today, the US $ 6 month LIBOR rate is 0.73 percent.

The SLDB issue was executed in terms of Section 2 (a) and 2 (c) of the Foreign Loans Act No. 29 of 1957 as amended.

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

Eligible investors may purchase SLDBs in the secondary market through designated agents appointed by the Central Bank.

Development Bond is issued by a government to raise financing for funding one or more specific projects or development work in geographic area. The Central Bank of Sri Lanka on behalf of the Sri Lankan government also sold sovereign bonds worth up to US $ 1 billion, which is most likely to be utilized for the redemption of the country’s first-ever sovereign bond in 2007, which matures in October this year.