Related News:
Sri Lanka to Sell Dollar Bonds Overseas by End-2010, Central Banker Says
Sri Lanka plans to sell dollar- denominated bonds overseas by the end of this year as an improving economy bolsters confidence in the nation’s assets, according to the central bank.
The South Asian country’s third-ever overseas offering is likely after August, Central Bank of Sri Lanka Assistant Governor C.J.P. Siriwardena said in a telephone interview today. The size of the issue has yet to be decided, he added.
“With the expanding growth figures and International Monetary Fund installment, investor perception is high,” Siriwardena said in Colombo.
Sri Lanka yesterday unveiled plans to slash its budget deficit by the most in eight years and pledged to cut taxes to spur economic growth after a 26-year civil war ended in May 2009. The IMF on June 28 approved the release of about $408 million to Sri Lanka under a $2.5 billion loan program that’s boosted the island’s foreign-exchange reserves.
The end of the war helped Sri Lanka’s $41 billion economy expand 7.1 percent in the three months ended March 31, the fastest pace since 2007.
The central bank on June 10 raised its 2010 growth forecast to 7 percent from an April estimate of 6.5 percent, saying all sectors of the economy had shown “substantial” growth. Governor Nivard Cabraal said in February Sri Lanka may sell $500 million of 10-year bonds to fund the rebuilding of roads, ports and power plants.
Ratings Outlook
The nation’s last global bond sale in October attracted bids for more than 13 times the $500 million offered and the 7.4 percent notes due in January 2015 were sold to yield 5.06 percentage points more than similar-maturity U.S. Treasuries. Its debut offering in October 2007 saw $500 million of debt due October 2012 sold at a premium of 3.97 points.
Standard & Poor’s in October raised its outlook on Sri Lanka’s credit rating to positive from stable. The nation has a long-term foreign currency debt rating of B, five levels below investment grade and on a par with Kenya, Paraguay and Ukraine.
Sri Lanka also had its outlook revised to stable from negative on Oct. 9 by Fitch Ratings. The credit assessor affirmed the country’s rating at B+, its fourth-highest non- investment grade.
Siriwardena said Sri Lanka will next month choose an advisor from among six international banks to help the island improve its credit ratings.
“We will be approaching the rating agencies with the selected advisor,” Siriwardena said.
Sri Lanka is formulating a strategy to have its rating upgraded to investment level in the next four years, the central bank said in a June 9 statement. Siriwardena said a 10 percent cap on foreign ownership of the government’s local-currency debt will be retained.
To contact the reporter on this story: Anusha Ondaatjie in Colombo at anushao@bloomberg.net.
Rate These Stories
Rate this Page