Global Investors’ Demand Exceeds over USD 6 billion in 14 hours for Sri Lankan Sovereign Bond Issue
September 30, 2010 12:44 am
The USD 1 billion 10 year Sovereign Bond issue - the third international sovereign bond offering following issues in 2007 and 2009 - attracted an order book that exceeded USD 6.3 billion within 14 hours of opening, thereby being over-subscribed by more than 6 times, clearly underscoring the high global investor confidence based on the recent progress and the future prospects in Sri Lankan economy, states the Central Bank of Sri Lanka.
It further adds:
Sri Lanka finalized a USD 1 billion 10 year Sovereign Bond issue with a coupon rate of 6.25% on 27 September 2010. This was the third international sovereign bond offering, following issues in 2007 and 2009.
The offering attracted an order book that exceeded USD 6.3 billion within 14 hours of opening on 27 September 2010, thereby being over-subscribed by more than 6 times, clearly underscoring 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.
Orders were received from 362 investors globally. By geographic distribution, 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 were allocated to Fund and Asset Managers and the balance to Pension Funds, Insurance companies and banks.
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% 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 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.
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.
