Sri Lanka to Sell $1bn 10yr Sovereign Dollar Bond in September to Fund Infrastructure & Retire Expensive Loans. Roadshows in London/Singapore/New York

10th May 2011, in.reuters.com, By Shihar Aneez

Sri Lanka plans to sell a billion sovereign dollar bond this year with a tenure of 10 years or more to retire expensive debt and fund vital infrastructure projects, the island nation's central bank said on Tuesday.

The issue will be Sri Lanka's fourth eurobond offering since it first tapped international capital markets in 2007.

"It will be $1 billion and the tenure will be 10 years or even more," Dharma Dheerasinghe, the central bank's deputy governor, told Reuters in an interview. "We are in the process of writing to investment banks and other institutional investors and the road shows will be done in June."

This issue will be used to refinance expensive debt and fund infrastructure projects. Proceeds from earlier bonds were mostly used to pay for infrastructure projects during the last years of a quarter-century civil war that ended in May 2009 and after.

In September, Sri Lanka's issued a $1 billion, 10-year eurobond yielding 6.25 percent which received $6.33 billion in offers.

That followed two $500 million, five-year bond sales, the first in 2007 and the second in 2009. Sri Lanka wants to trim its long-term borrowing costs and cut its debt-to-GDP ratio to 67 percent by 2014 from last year's 81.9 percent.

"We could go to the market even earlier than October this year," he said.

INFRASTRUCTURE DRIVEN GROWTH

Sri Lanka has allocated about $6 billion to road, railway, port, airport, and power generation projects projects that are either underway or in the pipeline, hoping to keep its $50 billion economy growing sustainably at 8 percent or more.

Sri Lanka has forecast a record economic expansion of 8.5 percent this year, from last year's 32-year high of 8 percent, despite rising inflationary worries.

"We can achieve a growth between 8.2-8.5 percent this year as the economy has the capacity to expand more with the end of the war and we are underperforming in a number of sectors," Dheerasinge said.

Sri Lanka's annual inflation jumped to a 27-month high of 9.8 percent in April from a year earlier and the annual average inflation hit a 19-month high in April, well above analysts forecast.

"Both annual average and point-to-point inflation will be below what it is now and the rise in inflation is purely due to supply constraints."

The central bank raised commercial banks' deposit requirement by 1 percentage point to 8 percent in April to try and ease potential demand-side inflation by reduce excess liquidity caused by foreign currency inflows.

"We will see a reduction in excess liquidity with the expansion of the economic activity," Dheerasinghe said. (Editing by Bryson Hull).

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Sri Lanka Sells $192mn Dollar Bonds mainly to Local Investors 375 & 385 Basis Points above 6 Month LIBOR

08th March 2011, www.lankabusinessonline.com

Sri Lanka has sold 192 million US dollars in three and four year dollar denominated bonds mainly targeting local investors, rolling over existing maturing debt issued at much higher rates.

The Central Bank's public debt department said it had received bids of 204.25 million US dollars.

It had accepted bids of 99 million US dollars for 3-year bonds at a weighted average yield of 375 basis points above the 6 month London interbank offered rate (LIBOR) and 93 million dollars for 4-year bonds at LIBOR plus 385 basis points.

US Dollar 6 month LIBOR rate is 0.46 percent on Tuesday, the debt office said.

In March 2009 in the midst of a balance of payments crisis, Sri Lanka had to pay 540 basis points above the London rate to the holders of 184.25 million in maturing 2-year paper.

The debt office said bids came from both local and foreign banks.

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Sri Lanka $1bn Bond Issue Closes in 14 Hours Attracting $6.3bn Bids

28th September 2010, www.island.lk

* 362 investors throw in more than US$ 6.3 billion

* Yield at 6.25 percent, lower than issues in 2007, 2009

Central Bank’s Public Debt Department Superintendent C. J. P. Siriwardena said the global issue of the US$ 1 billion sovereign bonds closed within 14 hours after opening at 9 a.m. Hong Kong time on Monday (27), attracting bids amounting to more than US$ 6.3 billion.

The 10 year bonds yielded 6.25 percent through competitive bidding in an issue managed by jointly HSBC, Royal Bank of Scotland, Bank of America Merrill Lynch and Bank of Ceylon. The three foreign banks have also been appointed as sovereign ratings advisors to the government for the next four years.

"There are two things that make this bond issue different from the previous sovereign bond issues. The first being the extension of the yield curve from five years to ten, while the second, the size, US$ 1 billion from the previous issues of US$ 500 million. Investor response was overwhelming," Siriwardena told The Island Financial Review.

"The fact that investors picked up the issue at 6.25 percent is also a reflection of their confidence in Sri Lanka’s economy.

Inflation is benign, the exchange rate is stable, reserves are strong and the economy has shown strong growth during the first and second quarters (7.1 percent and 8.5 percent), this is why they accepted the bonds at this rate for ten years," he said.

The proceeds from this sovereign bond issue would be utilized for infrastructure development activities carried out by the government and also to restructure the existing government debt portfolio by retiring high cost domestic debt and short term foreign currency denominated debt.

A sovereign bond issue for US$ 500 million, after the end of the conflict last year, was 13 times oversubscribed and was priced at 7.4 percent. This issue was the second since October 2007, which was also for US$ 500 million priced at a much higher rate of 8.25 percent.

"Orders were received from 362 investors globally. By geographic distribution, 52.5 percent of the bonds were allocated to investors in the United States, 25 percent to investors in Europe and 22.5 percent to investors in Asia. By investor type, 85 percent of the bonds were allocated to Fund and Asset Managers and the balance to Pension Funds, Insurance companies and banks," the Central Bank said in a statement last afternoon.

"The Offering is of 144A / Reg. S format and the bonds will mature in October 2020. The bonds are rated B+ by two international rating agencies, Standard & Poor’s and Fitch Ratings and will be listed on the Singapore Exchange.

"The current coupon rate of 6.25 percent for the 10 year sovereign bond is significantly lower than the cost of borrowings as compared to previous two international offerings in 2009 and 2007," the Central Bank said.

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$6.3bn Orders for $1bn 10yr Sri Lanka Dollar Bonds

$6.3bn Orders for $1bn 10yr Sri Lanka Dollar Bonds

27th September 2010, www.bloomberg.com, By Anusha Ondaatjie and David Yong

Sri Lanka received more than $6.3 billion of orders for a global sale of $1 billion in bonds to help repay debt and rebuild after the end of three decades of civil war.

The October 2020 securities were sold to yield 6.25 percent, or 373 basis points more than similar-maturity U.S. Treasuries, according to data compiled by Bloomberg. The securities were marketed to investors at an indicative yield of 6.5 percent, according to two investors briefed about the sale. Bank of America Corp., HSBC Holdings Plc and Royal Bank of Scotland Group Plc managed the issue, assisted by Bank of Ceylon.

“They came in against a positive backdrop for emerging- market bonds,” said Jetro Siekkinen, a money manager in Helsinki at Aktia Asset Management, who oversees $7.8 billion bonds and bought some of the new debt. “The spread is attractive in this yield-hungry environment.”

Global investors plowed a record $27.9 billion of funds into emerging-market debt this year through Aug. 25, according to Barclays Capital Plc, citing data compiled by EPFR Global. Dollar debt sold by developing nations has rallied 13 percent this year, JPMorgan Chase & Co’s EMBI Global Index shows.
GDP, Stock Gain

Sri Lanka’s gross domestic product expanded 8.5 percent in the three months ended June 30 from a year earlier, the most since 2002, the statistics department said Sept. 16. The $42 billion economy may grow as much as 8 percent in 2010, the central bank said Sept. 21, having previously forecast a 7 percent expansion.

The Colombo All-Share Index of shares has more than tripled since the end of a 26-year civil war in May 2009, the best performance among benchmark stock indexes. The local rupee has strengthened 2.7 percent to 111.90 per dollar over the same period, according to data compiled by Bloomberg.

The central bank said in a statement today the oversubscription reflected “high global investor confidence based on the recent progress and the future prospects in the Sri Lankan economy since the end of the conflict.”

The bank said orders were received from 362 investors globally, with 85 percent of the bonds allocated to fund managers and the balance going to pension funds, insurance companies and banks.

S&P upgraded Sri Lanka’s credit rating one level to B+ from B on Sept. 14, four levels below investment grade. Fitch raised its rating outlook to positive from stable on Sept. 21. The latest debt sale is Sri Lanka’s third global offering, following $500 million issues of five-year bonds in October 2007 and October 2009.

Sri Lanka’s debt has returned 42 percent since May 18, 2009, according to JPMorgan Chase & Co.’s EMBI Global Index. That’s when government forces defeated Tamil Tiger rebels. The return compares with a 19 percent gain in China, 24 percent in Brazil and 27 percent in Russia.

To contact the reporters on this story: David Yong in Singapore at dyong@bloomberg.net; Gabrielle Coppola in New York at gcoppola@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net.

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Sri Lanka Dollar Bond Receives Bids over $2.5bn at Likely Yield of 6.375pct

Sri Lanka Dollar Bond Receives Bids over $2.5bn at Likely Yield of 6.375pct

28th September 2010, www.dailynews.lk

Sri Lanka has received bids of more than $2.5 billion for its 10-year dollar bond, and the deal looks set to price tighter than the expected 6.5 percent, sources said on Monday.

Sri Lanka is the latest emerging sovereign to venture into bond markets as investors’ risk appetite has returned with a vengeance this month, and its offer has met with solid demand.

Fund managers reported that the book size was at $2.5 to $3 billion so far, compared with the expected $1 billion to be sold.

Books have closed in Europe and Asia.

Sources had earlier told Reuters the deal would price around 6.5 percent. Sri Lanka plans to use the bond’s proceeds to fund the budget and to pay short-term debt.

“Given the books are at these levels already and the U.S. is yet to put in (orders), 6.375 percent (yield) looks likely,” one fund manager in London said. Asian orders had been around $1 billion. The Sri Lankan central bank had said earlier it planned to issue $1 billion of sovereign bonds. A source with knowledge of the deal said Colombo would likely cap the issue at $1 billion.

This will be the island’s third global debt issue since 2007, when it issued a maiden $500 million, five-year bond.

The government sold another $500 million, five-year bond in 2009. Bank of America, Merrill Lynch , HSBC Holdings Plc and Royal Bank of Scotland Group Plc are managing the sale.

“We are seeing considerable interest for emerging market bonds, and Sri Lanka will play right into that,” said Scott Bennett, who manages $1.5 billion in Asian fixed income as head of Asian Investment at Aberdeen Asset Management in Singapore.

The sale comes a week after Standard & Poor’s raised the country’s sovereign credit rating by a notch to B-plus from B, citing growth prospects and government efforts to narrow the budget deficit.

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Sri Lanka's $ 1bn 10yr Sovereign Bond May Yield 6.5pct and Expected to be Comfortably Oversubscribedeld