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Wednesday, 8 January 2014 00:03 - - {{hitsCtrl.values.hits}}
The Issue represents the sixth US Dollar benchmark offering in the international bond markets by Sri Lanka since 2007 and the first Sovereign Bond issue in the international capital markets in 2014.
Citigroup, The Hongkong and Shanghai Banking Corporation Ltd., Standard Chartered Bank and UBS acted as Joint Lead Managers/Bookrunners on the transaction.
"Tighter yield reflects the continued confidence that international investors have placed in the Sovereign Bond issuance of Sri Lanka. Driven by the support from existing and new investors, Sri Lanka succeeded in achieving a five-year cost of funds, which is progressively lower compared to the previous Issuances – Central Bank"
Post announcement of the transaction, Sri Lanka conducted a series of fixed income investor update through internet-based presentations and conference calls covering Asia, Middle-East, Europe and the USA.
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 6 January 2014 with an initial price guidance of 6.25% per annum.
With firm support from investors, the order books grew steadily, allowing Sri Lanka to price the Issue at a yield of 6.00% in spite of the rising benchmark US Treasury yield.
“This tighter yield reflects the continued confidence that the international investors have placed in the Sovereign Bond issuance of Sri Lanka,” the Central Bank said.
The final order books stood at $ 3.2 billion, an oversubscription ratio of 3.2 times, from 200 accounts, achieved within an 18-hour book build period. Distribution was very well diversified, with Asia taking 12%, Europe 26% and the US at 62%.
Global fund managers were the largest investors in the transaction, representing 89%, with banks and private banks taking 8% and 3% respectively.
“Driven by the support from existing and new investors, Sri Lanka succeeded in achieving a five-year cost of funds, which is progressively lower compared to the previous issuances,” the Central Bank added.
Sri Lanka’s previous five-year issuances in 2007 and 2009 were priced at yields of 8.25% and 7.40% respectively. “This achievement is all the more impressive, given the rising benchmark US Treasury yield and also the high volatility seen in global capital markets in recent months,” the Central Bank added.
