Sri Lanka returns to the US dollar bond market

COLOMBO (News 1st): The Central Bank, on behalf of the Sri Lankan government, returned to the U.S. dollar bond markets yesterday, to raise US$ 2 billion. This represents Sri Lanka’s fourteenth U.S. dollar benchmark offering in the international bond markets since 2007, and its second transaction this year. The US$500 million 5-year bonds issued at a yield rate of 6.35% will mature on June 28th, 2024, while the US$ 1.5 billion 10-year bonds, issued at a yield rate of 7.55% will mature in March 28th, 2030. Economists point out that the government will benefit from the marginally lower yield rates of these bonds when compared with the yield rates of the bond issuance in March this year. The Central Bank says that the bond issuance was oversubscribed three times, reflecting a total subscription of U.S.$ 6.2 billion, clearly highlighting global investors’ continued confidence in Sri Lanka and their positive outlook on Sri Lanka’s economic growth story. The 5-year tranche saw allocations of 80% to U.S.and Europe. Sri Lanka was due to settle its highest ever loan installment of USD 5.9 billion this year. Speaking exclusively to News 1st, Deputy Governor of the Central Bank S. R. Attygalle said that approximately 60 to 65% of this year's debt installment has already been settled. He added that the sovereign bonds of US$ 2 billion was issued under the appropriations act, and will be used to finance budget expenditure and repay the government debt. He adds that approximately 60 to 65% of this year's debt installment, including the US$ 1.5 billion and syndicated loans worth more than UD$ 300 million, have already been settled. Economists say that Sri Lanka's current reserves are not sufficient to repay foreign debt and that the government has no other option than to raise commercial loans as a temporary solution. They stress that in the long term, Sri Lanka will not be benefitted by this action.