CB successfully raises $ 650 m; global investor appetite swells to $ 2b

The Central Bank on behalf of the Government successfully launched and priced a US$ 650 million 10-year International Sovereign Bond (Issue) at a yield of 6.125% per annum.

It said the Issue represents the eighth US Dollar benchmark offering in the international bond markets by Sri Lanka since 2007.

Citigroup Global Markets Inc., Deutsche Bank, The Hongkong and Shanghai Banking Corporation Limited and Standard Chartered Bank acted as Joint Lead Managers/Bookrunners on the transaction.

Fitch Ratings, Moody's Investors Service and Standard and Poor’s have rated the Issue at 'BB-', ‘B1’ and ‘B+' respectively.

The Issue was announced during the Asia morning on May 28, 2015 with an initial price guidance of 6.375% per annum. The order books grew steadily, allowing Sri Lanka to price the Issue at a yield of 6.125% or a spread of 397.7 bps vs the 10-year US Treasury.

The compression in yield of 25 basis points reflects the continued confidence that the international investors have placed in the sovereign bond issuance of Sri Lanka.

"The final order books stood at US$ 2 billion, an oversubscription ratio of 3.08 times, from 173 accounts," the Central Bank said.

Distribution was very well diversified, with Asia taking 23%, Europe 27% and the US at 50%. Global Fund Managers were the largest investors in the transaction, representing 79%, with Banks, Pension Funds/Insurance and Private Banks taking 9%, 7% and 5% respectively.

Central Bank said with this transaction, this Issue represents the first Sovereign Bond Issue for Sri Lanka in the international capital markets in 2015, post the change in government.

"This Issue also succeeded in achieving a ten-year cost of funds which is inside the current Sri Lanka US$ secondary levels and at tighter spread vs the US Treasury compared to the last ten-year Sri Lanka US$ in 2012. This achievement is all the more impressive, given the recent volatility in US Treasury yields and anticipated Fed rate hike later this year," the Central Bank added.