Sri Lanka com­pletes largest sovereign bond of­fer­ing rais­ing US $ 2.5bn

Daily Mirror (Sri Lanka) - - FINANCE -

Sri Lanka last week suc­cess­fully com­pleted its largest bond of­fer­ing so far, mark­ing its re­turn to the in­ter­na­tional bond mar­ket.

The Cen­tral Bank said, on be­half of the Sri Lankan gov­ern­ment, it is­sued US $ 1.25 bil­lion five-year and US $ 1.25 bil­lion 10-year se­nior unse­cured fixed rate notes, with ma­tu­rity dates of April 18, 2023 and April 18, 2028, re­spec­tively.

The notes have been rated B1, B+ and B+ by Moody’s In­vestors Ser­vice, Stan­dard and Poor’s and Fitch Rat­ings, re­spec­tively.

“This marks Sri Lanka’s 12th US dol­lar bench­mark of­fer­ing in the in­ter­na­tional bond mar­kets since 2007. This also rep­re­sents the largest offshore bond of­fer­ing ever by Sri Lanka and is a strong re­flec­tion of the in­ter­na­tional in­vestor com­mu­nity’s con­tin­ued sup­port for Sri Lanka through the years,” the Cen­tral Bank said.

Iden­ti­fy­ing a sup­port­ive is­suance win­dow in a chal­leng­ing mar­ket en­vi­ron­ment, Sri Lanka an­nounced the trans­ac­tion dur­ing the Asia morn­ing of April 11, 2018.

The joint syn­di­cates re­leased terms and ini­tial price guid­ance for new five-year and 10-year tranches at 6.00 per­cent and 7.00 per­cent ar­eas, re­spec­tively.

Ac­cord­ing to the Cen­tral Bank, the trans­ac­tion saw strong in­ter­est from a wide range of high-qual­ity in­vestors, which al­lowed the is­suer to tighten the price guid­ance by 25 bps each across both tranches.

“The notes even­tu­ally priced dur­ing New York hours, well in­side the ini­tial price guid­ance with a coupon of 5.75 per­cent and 6.75 per­cent for new five-year and 10-year tranches, re­spec­tively.”

The fi­nal or­der book stood at US $ 3.0 bil­lion across over 235 ac­counts for the five-year tranche and US $ 3.5 bil­lion across over 190 ac­counts for the 10-year tranche.

“This clearly re­flects in­vestors’ con­tin­ued con­fi­dence in Sri Lanka and its eco­nomic out­look,” the Cen­tral Bank said.

The five-year tranche saw al­lo­ca­tions of 66 per­cent to the US, 24 per­cent to Europe and the re­main­ing 10 per­cent to Asia. By in­vestor type, the split was 92 per­cent to fund man­agers, 5 per­cent to in­sur­ance and pen­sion funds, 2 per­cent to banks and one per­cent to pri­vate banks.

The 10-year tranche saw al­lo­ca­tions of 65 per­cent to the US, 29 per­cent to Europe and the re­main­ing 6 per­cent to Asia. By in­vestor type, the split was sim­i­lar to the five-year tranche i.e. 92 per­cent to fund man­agers, 5 per­cent to in­sur­ance and pen­sion funds, 2 per­cent to banks and one per­cent to pri­vate banks.

Cit­i­group, Deutsche Bank, HSBC, J.P. Mor­gan and Stan­dard Char­tered Bank acted as the joint lead man­agers and bookrun­ners.

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