DFCC, NDB plan $ 250 m, 10-year global bonds

Reuters: Sri Lanka’s top development lenders, National Development Bank and DFCC Bank, are each planning $ 250 million bond issues, Deputy Treasury Secretary S.R. Attygalle told Reuters on Tuesday.

The decision to let local banks tap the international market follows the Government’s decision not to issue an international sovereign bond itself this year after raising money through euro bonds for three consecutive years.

“Both NDB and DFCC are working on the bond issue. Each of them will go for $ 250 million, 10-year bond issue,” Attygalle said. He did not say when the lenders planned to tap the global capital market.

Two sources with knowledge of the deals said NDB had appointed HSBC, Barclays Capital, Singapore’s DBS Bank and the investment arm of NDB as the lead managers to manage the bond.

DFCC Bank, meanwhile, has mandated Citibank NA and Bank of America Merrill Lynch to manage its bond issue, the sources said.

“The Treasury has agreed to share some risks, possibly exchange rate risk,” one source said. “But if the banks go for a 10-year bond now, the rate will be above 7% due to the rise in US Treasury yields.”

Finance Secretary P.B. Jayasundera in February said the Government would share some risk in banks’ foreign borrowing.

DFCC declined comment on the lead managers, while NDB officials were not available to comment.

On Friday, Attygalle said Sri Lanka’s State-owned National Savings Bank (NSB) is likely to sell up to $ 1 billion of global bonds by the end of this month, the biggest corporate bond issue so far.

In April, Sri Lanka’s biggest State-owned lender, Bank of Ceylon, sold a $ 500 million bond at a 5.325% yield.