The Public Debt Department of the Central Bank is
issuing Sri Lanka Development Bonds amounting to US$ 100 million on
behalf of the government where interest would be paid every six
months.
The issue was opened for subscription last Friday.
The offer is for US$ 50 million
bonds with a two-year
maturity period and another US$ 50 million with a three-year maturity
period, according to the do*****ent of offer released by the Public Debt
Department.
The
interest rate would be the six-month London
Interbank Offered Rate (LIBOR) for dollars plus a margin to be
determined through competitive bidding. Subscriptions close this
Thursday and the settlement date is March 26.
Foreign
investors, non-resident Sri Lankans, dual
citizens, authorised dealers, primary dealers, companies with specific
agreements with the BOI (with exemptions from exchange controls) and
insurance companies registered with the Insurance Board of Sri Lanka
(IBSL)
are eligible to subscribe to this issue.
Selected
authorised dealers and primary dealers have
been designated as agents to purchase these bonds while the Bank of
Ceylon has been designated as the paying agent.
Acuity
Securities, Bank of Ceylon, Capital Alliance,
Citibank Colombo, Commercial Bank, Deutsche Bank Colombo, DFCC
Vardhana
Bank, Entrust Securities, First Capital Treasuries, Habib Bank
Colombo,
HNB, HSBC Colombo, Indian Bank Colombo, MCB Bank, NDB, NTB, NatWealth
Securities, NSB Fund Management, People’s Bank, Public Bank Colombo,
Sampath Bank, Seylan Bank, Standard Chartered Bank Colombo and State
Bank of India Colombo are the designated agents to the issue.
Investments
in the bond issue would be exempted from any
taxes.
Govt borrowing...
Dealers said the latest
bond issue was an attempt by the
government to borrow low-cost funds.
"The
government is on a spending spree with all the
development activities requiring short term funds.
"Last
week’s Treasury bill auction was rejected because
authorities feared short term rates were under pressure to raise," a
dealer said.
"This
bond issue would be fresh funds and is expected to
cost the government much less than the domestic market," another
dealer
said.
"Appetite
of domestic investors may not be very
encouraging but foreign investors are relatively bullish on Sri
Lanka,"
he said.
Since
the end of the war last May, there has been marked
increase in investor sentiments and interest in Sri Lanka’s
Development
Bond and Sovereign Bond issues.
In
March 2009, Sri Lanka Development Bonds (SLDB) for
US$ 200 million attracted only US$ 184 million.
However,
the first issue after the war in June 2009, an
SLDB issue had been oversubscribed by 135 percent, raising US$ 115.8
million of which US$ 50 million was to be rolled over while the
balance
went in to replenish reserves of the Central Bank after a US$ 125
million loan repayment was made that month. The offered SLDBs in this
issue amounted to US$ 50 million with a two-year maturity period at
the
6 month LIBOR for US Dollars plus 4.97 per cent.
Again
in August 2009, the Public Debt Department of the
Central Bank issued US$ 190 million Sri Lanka Development Bonds (SLDB)
at a rate of LIBOR 6 month rate for US dollars plus 449.8 basis points
(4.49 percent) to pay-up maturing bonds amounting to US$ 175 million.
This
offer was for two-year SLDBs for US$ 150 million
made on August 6 which was oversubscribed 1.3 times with bids from
local
and foreign commercial banks amounting to US$ 195.5 billion. The bank
accepted US$ 190 million of these bids.
Source: The Island Online
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