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Friday, July 22 , 2011 - 04.15 GMT |
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Development Bonds oversubscribed
'This
reflects high levels of investor confidence
in SL’s economy'- CB Governor |
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Sri Lanka successfully launched and priced a US$ 1.0 billion 10-year global bond offering. The issue has been oversubscribed by 7.5 times thus resulting in the final order-book standing at US$ 7.5 billion dollars.
This transaction represents the fourth US Dollar benchmark offering in the global bond markets by Sri Lanka since 2007, stated the Central Bank.
On the back of overwhelming support, Sri Lanka succeeded in pricing the issue to yield 6.25%, the tight end of the final guidance, the Bank further said.
The Central Bank also said distribution was very well diversified, with Asia taking 27%, Europe 30% and the US at 43%. Fund Managers were the largest investors in the transaction, representing 86%, with Banks/Private Banks taking 8%, Corporates 3% and Insurance companies 3%, the Bank added.
With this transaction Sri Lanka succeeded in achieving a cost of funds more than 40 bps lower, as a margin over the US Treasury, compared to Sri Lanka’s last 10-year bond offering in September 2010, which was issued at a spread of +373.1 bps. This achievement is all the more impressive, given the volatility seen in markets globally in recent months.
“We are very pleased with the strong response to this transaction, in volatile market conditions, which reflects high levels of investor confidence in Sri Lanka’s economy and the robust growth prospects for the country,” said Ajith Nivard Cabraal, Governor of the Central Bank.
Bank of America Merrill Lynch, Barclays Capital, HSBC and the Royal Bank of Scotland acted as joint bookrunners and joint lead managers on the transaction. Bank of Ceylon acted as the co-manager on the transaction.
Prior to launch of the transaction, Sri Lanka conducted a series of fixed income investor update meetings with investors in Singapore, Hong Kong, various cities in the USA and London. During the roadshow, Sri Lanka achieved a credit ratings upgrade by Fitch to BB-, and both the Moody’s and S&P ratings were improved to positive outlook, the Bank said.
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