The Central Bank on behalf of the Government, offered to issue US Dollar 100 million Sri Lanka Development Bonds (SLDBs) to eligible investor categories.

The offer was opened on 12 March 2010 with the settlement on 26 March 2010. The offer was oversubscribed 1.34 times of the offer by both foreign and local commercial banks, with the total bids received amounting to US Dollar 134 million.

Of the bids received, the Government decided to accept US Dollar 55 million of 3 year bonds and US Dollar 37 million of 2 year bonds at the market determined rate of US Dollar 6 month LIBOR + 395 bps (weighted average margin) and 6 month LIBOR + 380 bps (weighted average margin), respectively. Today, the US Dollar 6 month LIBOR rate is 0.40 per cent. At the last auctions held for similar maturities, the weighted average margin for 3 year maturity was 425 bps in September 2009 and for the 2 year maturity auction held in August 2009, the weighted average margin was 450 bps.

This SLDB issue is within the borrowing limit approved under the Vote on Account by Parliament for 2010 and the funds mobilized through the new bond issuance is to be used for development activities carried out by the government.

The SLDBs are transferable by endorsement, delivery and registration with the Superintendent of the Public Debt of the Central Bank of Sri Lanka. Eligible investors may purchase SLDBs from Designated Agents appointed by the Central Bank of Sri Lanka in the secondary market.