The Central Bank of Sri Lanka on behalf of the government successfully raised 500 million dollars through 5.5-year sovereign bonds and one billion dollars through 10-year sovereign bonds.
The Central Bank said the “successful issuance” was Sri Lanka’s 10th US Dollar bond issuance and the first dual-tranche offering.
The Bonds have been rated ‘B1’, ‘B+’, and ‘B+’ by Moody’s Investors Service, Standard and Poor’s and Fitch Ratings, respectively. Citigroup, Deutsche Bank, HSBC and Standard Chartered Bank acted as the Joint Lead Managers and Bookrunners.
“Despite the high volatility in the global financial markets following the historic U.K. referendum in June regarding their membership of the EU, the Bonds saw strong interests from a wide range of high quality investors,” a statement said.
“Orders totaled 2.5 billion dollars for the 5.5-year tranche and 3.0 billion dollars for the 10-year tranche.”
Both the 5.5-year and 10-year tranche were priced well inside the initial price guidance of 6.125 percent area and 7.125 percent area, with a coupon of 5.750 percent and 6.825 percent at par, respectively.
“This is a testament to investors’ continued confidence in Sri Lanka and their positive sentiment on the economic outlook of Sri Lanka.”
The Central Bank said 200 high quality institutional accounts placed orders. The 5.5-year tranche saw allocations of 35 percent to the U.S., 37 percent to Europe, and the remaining 28 percent to Asia.
By investor type, the split was 85 percent to fund managers, 8 percent to insurance and pension funds, 3 percent to banks, and 4 percent to private banks. The 10-year tranche saw allocations of 62 percent to the U.S., 28 percent to Europe, and the remaining 10 percent to Asia.
By investor type, the split was 91 percent to fund managers, 7 percent to insurance and pension funds, 1 percent to banks and 1 percent to private banks.
“It was luck. Had we gone last week, it (the yield) would have been much higher than this,” Finance Minister Ravi Karunanayake told Reuters.
“The order book saw $6.6 billion and we got $1.5 billion in both bonds.”
IFR reported that the 144A/Reg S notes were launched on what a banker described as one of the best days in Asian primary this year.
Financial markets had stabilised after the volatility caused by the UK vote to leave the European Union, US payrolls data last Friday pointed to the Federal Reserve keeping rates steady this year, and Sri Lanka’s outstanding sovereign bonds rallied.
The country’s 6.85 percent November 2025s were yielding around 6.7 percent on a bid yesterday, the tightest level since that 1.5bn dollar bond was issued last year, according to Thomson Reuters data.
“We were able to engage high-quality, huge global EM funds, which shows that they were able to regain their faith in this country,” said a syndicate banker involved in the trade.
Another investor said: “Sri Lanka had a good macro story since the approval of the IMF loan and the appointment of a new central bank governor.”