Sri Lanka likely to raise US $ 2bn via sovereign bonds

„US $ 500mn from 5-year bonds and US $ 1.5bn through 10-year bonds „Both bonds oversubscribed 3 times during day’s book building process: official „Sri Lanka raised US $ 2.4bn in March via 5-year and 10-year bonds

Sri Lanka is likely to raise US $ 2 billion through five-year and 10-year sovereign bonds launched yesterday, two government officials told Reuters, as the Indian Ocean island nation tapped global capital markets for the second time in three months.

The South Asian nation’s decision to capitalise on favourable market conditions comes two months after suicide bombers killed more than 250 people in attacks at churches and luxury hotels on Easter Sunday.

That attack has badly dented the Sri Lankan economy, in particular

deterring many thousands of foreign tourists from coming to the island.

“We are planning to raise US $ 500 million from five-year bonds and US $ 1.5 billion through 10-year bonds,” said a senior government official, who declined to be identified because he is not authorised to talk to media.

“Both bonds have been oversubscribed three times during the day’s book building process in Asia and Europe alone. We are waiting for U.S. markets to finalise the deal.”

A senior Finance Ministry official also said the total size of the bond borrowing will be US $ 2 billion. A source who is aware of the deal said the price of five-year bonds had tightened to near 6.4 percent from the initial price guidance of 6.6 percent, while the 10-year bond price also got tightened to 7.6 percent from the initial price guidance of 7.8 percent.

The sale is part of the plans to raise funds via sovereign bonds, as the government seeks new funds to repay the loans that are maturing.

In March, Sri Lanka sold US $ 1 billion in fiveyear bonds with a coupon of 6.85 percent and US $ 1.4 billion in 10-year bonds with a coupon of 7.85 percent and the borrowing costs were lower than originally predicted.

The 10-year bond sold in March last traded at 7.302 percent and the five-year bond last traded at 6.258 percent, Refinitiv data showed.

BOC International, Citigroup, Deutsche Bank, HSBC, Jpmorgan, SMBC Nikko and Standard Chartered Bank, who were the lead managers for the US $ 2.4 billion borrowing in March, are the joint bookrunners for the bond sale.

The sale of new global sovereign bonds comes as Sri Lanka is struggling to repay foreign loans, with a record US $ 5.9 billion due this year, including US $ 2.6 billion in the first quarter and more than US $ 1.2 billion in the second, the Central Bank data showed. (REUTERS)