Saturday, January 28, 2012

HSBC to Tap Sri Lanka Corporate Demand for Global Debt Sales

By Anusha Ondaatjie

Jan. 27 (Bloomberg) -- HSBC Holdings Plc, Europe’s biggest bank, plans to expand sales of debt issued by Sri Lankan companies to investors abroad as the island’s resurgent economy boosts demand for financing.

The lender is targeting the country’s financial firms and the tourism industry with overseas dollar bonds and syndications, according to Nick Nicolaou, who heads HSBC’s Sri Lanka operations. The London-based bank is focusing on funds of three-year tenure or more, Nicolaou said, without naming specific companies.

“Given the large amount of infrastructural development and private sector investment, the sort of financing required is difficult to raise totally in the local market,” Nicolaou said in an interview in Colombo on Jan. 26. “Investors are looking at opportunities in emerging markets and, without a doubt, there is confidence in Sri Lanka.”

The island’s economy grew 8.4 percent in the quarter to Sept. 30 as the end of a 26-year civil war in 2009 spurs infrastructure spending and encourages tourism and consumer demand. Sri Lanka’s $1 billion sale of 10-year dollar bonds in July, co-arranged by HSBC, attracted bids for more than seven times the amount on offer and the central bank has encouraged local companies to follow its lead and tap overseas funds.

Foreign inflows this year will probably include $500 million of overseas borrowings by large domestic companies and $1 billion of subordinated debt raised by commercial banks to boost regulatory capital requirements, Central Bank Governor Ajith Nivard Cabraal said earlier this month.

The island’s $50 billion economy may expand 8 percent in 2012, compared with an estimated 8.3 percent in 2011, Cabraal said.

Sri Lanka’s $500 million of 8.25 percent five-year bonds are maturing in October, according to data compiled by Bloomberg. HSBC, which helped arrange four of the island’s sovereign issues since 2007, would vie for lead manager role if the debt was to be refinanced, Nicolaou said.

--Editors: Pavel Alpeyev, Andrew Monahan

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