10th September 2010, www.lankabusinessonline.com
Sri Lanka's Urban Development Authority (UDA), a state agency, has launched a 5-year bond to raise 10 billion rupees and 30 percent of the issue is open to foreign investors, officials said.
Gotabhaya Rajapaksa, secretary to Sri Lanka's defence ministry, under which the agency operates, said the money would be used to build alternative houses for unauthorized dwellers in 800 acres of high value state land in Colombo city.
Investors could chose between three interest options: 11.0 percent annual, 10 percent monthly or a floating rate of Treasury bill plus 75 basis points every six months, Gamini Wickremasinghe, chairman of state-run Bank of Ceylon which is managing the issue said.
The issue opens for subscriptions Monday. The UDA said it would be able to build around 20,000 houses if 5.0 billion rupees was raised and around 65,000 if 10,000 billion rupees was raised.
P A Lionel, head of investment banking at Bank of Ceylon said commitments for over 5.0 billion rupees had already been received and they were open to offers for 10 billion rupees.
The bonds come with a Treasury guarantee.
Once city property has been released by shifting unauthorized dwellers, the UDA will lease the land to commercial developers. The debt will be serviced with the lease proceeds.
Lionel said foreign investors were among those who have committed to buy bonds. Sri Lanka's central bank has given permission for foreign investors to buy up to 30 percent of the issue or 30 billion rupees.
Up to 10 percent of outstanding government securities are already open to foreign investors and buyers have piled into the high yielding debt.