Heavily debt ridden Sri Lanka has returned to the U.S. dollar bond markets, successfully pricing a new issuance of U.S.$500 million 5-year and $1.5 billion long 10-year Senior Unsecured Fixed Rate Bonds (the “Bonds”) with maturity dates of June 28th, 2024 and March 28th , 2030, respectively.
BOC International, Citigroup, Deutsche Bank, HSBC, J.P. Morgan, SMBC Nikko and Standard Chartered Bank acted as the Joint Lead Managers and Book runners on the successful transaction
The latest issuance comes in the wake of a 2.4bn dollar bond issuance in March this year with the aim of financing cash flows in the 2019 budget.
A third bond sale of 2.0 billion US dollars will take place later, for debt management as maturities of bullet repayments on Eurobonds from 2019 to 2023 and from 2025 to 2028 alone will amount to USD 12.15bn.
This represents Sri Lanka’s fourteenth U.S. dollar benchmark offering in the international bond markets since 2007, and its second transaction this year.
The long 10-year tranche marks the longest tenor issuance to date in the international market, underlining the international investor community’s continued support for Sri Lanka and their confidence in the country’s economic fundamentals and long-term growth prospects.
However according to the World Bank this was new territory for the country and could expose the island nation to refinancing risks.
While the government has adopted policies designed to address these risks, the slow progress of key structural reforms remains a cause for concern, a senior treasury official said.
The transaction saw strong interest from a wide range of high quality investors, which allowed the Republic to tighten final price guidance to 6.40% (+/- 5bps) on the 5-year tranche, and 7.60% (+/- 5 bps) on the long 10-year tranche.
(LI)