Final order book in excess of $11 b achieving an oversubscription ratio of over 7 times, spread across 500 participating accounts
Bonds pricing at 6.20% reflecting a 42.5 basis points compression well inside the initial price guidance
2017 spread has substantially declined indicating a reduction in the risk premium demanded by the investors
Bonds allocation well diversified with 58% going to the US, 22% to Europe and remaining 20% to Asia
CB says success clearly reflects investors' continued confidence in Sri Lanka and their positive outlook on the Sri Lankan economic growth story
The Government yesterday successfully concluded its 10 year Sovereign Bond to raise $ 1.5 billion with the issue drawing over $ 11 billion in demand worldwide enabling an attractive pricing.
The Central Bank in a statement said that it, on behalf of the Government of Sri Lanka (GoSL), successfully priced a new $1.5 billion 10-year International Sovereign Bond (Bonds) on 4 May 4, 2017. The bonds have been rated ‘B1’, ‘B+’ and ‘B+' by Moody's Investors Service, Standard and Poor’s and Fitch Ratings respectively.
This marked Sri Lanka’s eleventh U.S. dollar benchmark offering in the international bond markets since
2007 and is a clear testament of the international investor community’s continued support for Sri Lanka
through the years. Citigroup, CITIC CLSA Securities, Deutsche Bank, HSBC, ICBC International, J.P.
Morgan and Standard Chartered Bank acted as the Joint Lead Managers and Bookrunners on this
The transaction was undertaken on the back of a strong market window post the Federal Open Market
Committee minutes release and ahead of the Nonfarm payroll and the French elections. The transaction
also coincided with the International Monetary Fund staff-level agreement that was released a day before on 3 May, 2017.
The transaction with an initial price guidance of 6.625% area was announced during the Asia morning of
4 May, 2017, and saw strong interests from a wide range of high quality investors, allowing Sri Lanka to tighten final price guidance to 6.250% area (+/-5 basis points) at the Asia evening on the back of books which were in excess of $7.5 billion. The bonds eventually priced during New York hours at 6.20% reflecting a 42.5 basis points compression, well inside the initial price guidance for a final transaction size of $1.5 billion.
The final order book was in excess of $11 billion, achieving an oversubscription ratio of over 7 times, spread across 500 participating accounts.
"This clearly reflects investors' continued confidence in Sri Lanka and their positive outlook on the Sri Lankan economic growth story," the Central Bank said. Further, compared to the 2016 spread between US Treasury 10 year yield and 10 year Sri Lanka bonds yield, 2017 spread has substantially declined indicating a reduction in the risk premium demanded by the investors, it added.
Geographical distribution was well diversified, with 58% of the final allocations going to the U.S., 22%
to Europe, and the remaining 20% to Asia. By investor type, the split was 83% to fund managers, 9% to
banks, 5% to insurance and pension funds, and the remaining 3% to other investors.
Govt. raises $285 m via SLDBs
The Government has raised a further $285.18 million via the issuance of Sri Lanka Development Bonds (SLDBs) of different tenure and at fixed and floating rates.
The Central Bank accepted $89.75 million on a 4 year 10 months floating rate option, $70 million at a 1 year fixed rate, $62.15 million on 1 year 10 months floating option, $44.28 on 2 year 10 months floating and $19 million on 1 year floating. Total bids received were $497.85 million with majority ($ 427 million) coming for floating options.
The Weighted Average Fixed Rate was 426.57 basis points and Weighted Average Margin (bps) over a 6-month LIBOR (floating) ranged from 254.79 and 412.06.