Sri Lanka's USD 1 billion bond issue oversubscribed more than 6 times within 14 hours

Sri Lanka's sovereign bond issue of USD 1 billion was oversubscribed by more than six times within 14 hours after its issue, the Central Bank said.

The Central Bank finalized the 10-year Sovereign Bond issue by with a coupon rate of 6.25% on Monday September 27. This was the third international sovereign bond offering, following issues in 2007 and 2009.

The current rate for this issue was significantly lower than the previous two USD 500 million bond issues in 2007 and 2009 which earn 8.25% and 7.40% respectively.

The Central Bank said the demand for the bond issue clearly underscores the high global investor confidence based on the recent progress and the future prospects in Sri Lankan economy since the end of the conflict in the country.

According to the Central Bank, orders have been received from 362 investors globally and 52.5% of the bonds were allocated to investors in the United States, 25% to investors in Europe and 22.5% to investors in Asia.

By investor type, 85% of the bonds have been allocated to Fund and Asset Managers and the balance to Pension Funds, Insurance companies and banks.

Bank of America, Merrill Lynch, Royal Bank of Scotland and Hong Kong and Shanghai Banking Corporation functioned as Joint Lead Managers and Joint Book Runners of the offering, while Bank of Ceylon participated as Co-Manager, a statement released by the Central Bank said.

The Government will use the proceeds from the bond issue to finance its current infrastructure and to restructure a part of the existing debt stock of the government to improve overall public debt management, it said.