Lankapage Logo CP 17 YEARS
Go Home Home Serving the Sri Lankan community globally since 2000
go to LankaPage.com

Leading News from Sri Lanka::

* Sri Lanka's US$ 1.5 billion dual-tranche sovereign bond oversubscribed to US$ 6.6 billion
Tue, Jul 12, 2016, 09:50 am SL Time, ColomboPage News Desk, Sri Lanka.

July 12, Colombo: Sri Lanka's dual-tranche US$ 1.5 billion international sovereign bond issued Monday to the international market was oversubscribed more than four times drawing US$ 6.6 billion, Finance Minister Ravi Karunanayake told Reuters on Monday.

The island nation raised $1.5 billion in two-tranche sovereign bonds at yields lower than initial guidance, taking advantage of strong risk appetite for emerging market debt.

The government borrowed $500 million in a 5-1/2-year tranche and $1 billion in a 10-year tranche, he said without commenting on the specifics of the yield but sources said earlier it was much lower than predicted.

"It was luck. Had we gone last week, it (the yield) would have been much higher than this. The order book saw $6.6 billion and we got $1.5 billion in both bonds," Finance Minister Ravi Karunanayake told Reuters on Monday.

Sri Lanka launched a US$ 500 million, 5.5-year bond at a yield of 5.75 percent and a US$ 1 billion, 10-year bond at 6.825 percent on Monday.

The aggregate bond orders exceeded $6.6 billion as investors were attracted to a sovereign that has been one of the best performers in Asia this year.

Asian sovereign bonds have rallied this year as investors look for better returns in a low-rate environment. That appetite has grown since Britain's vote to leave the European Union sent more money into safe-haven assets such as government bonds.

In early deals the new bonds due 2022 were trading at 101.25 cents on the dollar and those due 2026 were at 101.875, higher than the pricing level of 100, indicated by brokers.

Sri Lanka's sovereign debt has been one of the best performers in Asia this year.

The International Monetary Fund's (IMF) executive boards in June approved a three-year $1.5 billion loan to support Sri Lanka's economic reform agenda, after the South Asian nation was hit by a balance-of-payments crisis.

Over 200 accounts bought each bond, with the 5-1/2-year paper attracting 35 percent of funds from the United States, 37 percent from Europe and the rest from Asia, while 85 percent of the funds were from fund managers.

The 10-year bond attracted 62 percent of funds from the United States, 28 percent from Europe, and 10 percent from Asia with, 91 percent came from fund managers.

The final guidance for the 5-1/2-year tranche was 37.5 basis points (bps) lower than initial guidance in the area of 6.125 percent. For the 10-year bond, final guidance was 25 bps lower than the initial guidance of around 7.125 percent.

In comparison, bonds due in 2021 and 2025 were trading at a yield of 5.5 percent and 6.6 percent, respectively, before the new bonds priced.

A Singapore-based analyst said ahead of the pricing that the 10-year tranche looked fairly valued at current levels and the 5-1/2-year was attractive as long as it topped 6 percent.

"After Brexit, investors are looking for safe havens and I think dual tranche is an opportunity to get these investors attracted to our bond deals," Karunanayake earlier told Reuters.

Moody’s assigned a B1 rating to Sri Lanka’s global bond offering provisionally, and said it expected to remove the provisional status of the rating upon the closing of the proposed issuance and review of final terms.

According to JACI benchmarks, dollar bonds issued by Sri Lanka produced total returns of 10.11 percent in the year to date, more than established issuers such as the Philippines.

By comparison, German debt with maturities out to 15 years is yielding below zero and Dutch 10-year government bond yields fell below zero for the first time on Monday.

Citigroup, Deutsche Bank, HSBC and Standard Chartered are joint bookrunners for the Sri Lankan issue. The deal is expected to be rated B1/B+/B+, in line with the issuer, and should price on Monday.

 


ColomboPage - Recent 10 Stories ::
Sri Lanka university authorities decide to suspend scholarships to undergraduates protesting and boycotting lectures
-- [45 minutes ago]
Factories in Sri Lanka asked to generate their own electricity as dry weather continues
-- [2 hours ago]
Sri Lanka Navy to release 100 acres of land in Mullikulam for people
-- [2 hours ago]
Japan donates a fully equipped Ambulance to Sri Lanka Air Force
Indian nationals smuggling foreign currency and Wallapatta arrested in Sri Lanka
Sri Lanka prepares to hold UN Vesak Celebrations for first time
No bilateral agreements during Indian PM's visit to Sri Lanka, President clarifies
Sri Lanka Bureau of Foreign Employment earns Rs. 1.2 billion in profits for the first time
Minister suggests revising water supply charges for the economic stability of water board
Navy grants compensation of Rs. one million for the family of officer died during training in India

Copyright © 2000, 2016 by LankaPage.com (LLC) :
The news and other contents on ColomboPage are copyrighted property of LankaPage.com, LLC. Any unauthorized use of any information on ColomboPage may constitute a violation of copyright laws. You need written permission to reproduce, republish, post, transmit, broadcast or distribute, material from this site from LankaPage.com, LLC. However, news organizations or broadcasters in Sri Lanka may republish the news items in ColomboPage with proper acknowledgment to ColomboPage.