18th September 2009, www.bloomberg.com, By Anusha Ondaatjie
Sri Lanka, which is rebuilding its economy after the end of a 26-year civil war, hired HSBC Holdings Plc, JPMorgan Chase & Co., and Royal Bank of Scotland Plc to sell $500 million of bonds overseas, the South Asian island’s first in two years.
The selection was made from among seven banks that submitted proposals to manage the sale planned for October, the Central Bank of Sri Lanka said in an e-mailed statement today. The government is seeking to raise funds to build roads, schools and hospitals on the eastern and northern parts of the island.
Bank of Ceylon was appointed as a co-manager to work with the three joint lead managers for the sale, the statement said.
The end of almost three decades of civil war in May and a $2.6 billion loan from the International
Monetary Fund helped restore investor confidence and attracted foreign flows, the central bank said July 23. Standard & Poor’s raised its outlook on the island’s credit rating on Aug. 25 to stable from negative, citing improved foreign-exchange reserves.
HSBC, JPMorgan and Barclays Capital arranged Sri Lanka’s debut $500 million global bond sale in October 2007. Investors placed orders for more than three times the amount on offer. The five-year notes due October 2012 were priced to yield 8.25 percent, or 397.2 basis points higher than U.S. treasuries of similar maturity.
Sri Lanka’s foreign currency debt is rated B by Standard & Poor’s, five levels below investment grade, and B+ by Fitch Ratings, the fourth best junk rating. Reserves rose to a record $3.9 billion, aided by IMF funds and foreign buying of rupee- denominated debt, the central bank said on Aug. 28.
To contact the reporter on this story: Anusha Ondaatjie in Colombo at email@example.com.