Sri Lanka Invited Top 10 Banks to Raise $1bn Sovereign Bond

29th July 2010, www.news360.lk, By Prasanna C Rodrigo

Sri Lanka has invited top 10 banks in the Bloomberg League table to submit proposals to raise US$ 1 billion by a planned sovereign bond issue , which is due after august this year.

C.J.P. Siriwardena, Assistant Governor of the Central Bank told www.news360.lk the invitations were sent during last week.

Among the Banks invited ranks Barclays Capital, Deutsche Bank, JP Morgan, UBS, Credit Suisse, CITI, Merrill Lynch, BNP Paribas, HSBC and RBS.

Siriwardena said “The banks will have to submit proposals by Monday”

The Central Bank is hoping to select at least 3 banks to be the lead managers for the issue.

The Bank plans to go in for a 7 to 10 year tenor bond.

Siriwardena earlier said “This time we want to increase the yield curve” and added that at present market conditions, the interest rates would be around 6%, even for a 10 year bond.

Sri Lanka on 2 previous occasions successfully raised funds via sovereign dollar bond issues, each amounting to US$ 500 million.

One was in 2007 and the next was in 2009.

The public Debt department says the confidence on the Sri Lankan economy among international investors at present ranks high which makes it ideal to raise dollar bonds.

The debt office says the 2007 bond which was sold at a yield rate of 8% is now trading at 4.03%.

While the 2009 bond is trading at a rate of 5.18% and it was also sold at a higher rate of 7.40% in 2009.

When the yield goes down the price of the bond goes up, which makes it attractive for buyers.