Friday, May 4, 2012

UPDATE 1-S.Lanka Ports plans $1 bln bond sale to repay debt,build ports

* First bond in July, second later this year

* HSBC already mandated; on the process of rating

* Money to be used to repay yen-denominated loan, projects (Adds quotes, details)

By Ranga Sirilal

COLOMBO, May 4 (Reuters) - Sri Lanka's state-owned Ports Authority plans to raise $1 billion in two bond sales this year to repay a part of yen-dominated loans as well as expansion of port facilities, its chairman said on Friday.

The bond issue will be the biggest this year after the country's largest lender, Bank of Ceylon, raised $500 million through a five-year paper last week.

Priyath Wickrama told Reuters in an interview that the port authority plans to issue two 10-year bonds of $500 million each, pa rtly to fund the nation's post-war reconstruction.

"We will go for the first $500 million most probably around July and another $500 million within this year. We are trying for 10-year tenure as all the projects are long-term investments."

Since the end of a 25-year war in 2009, Sri Lanka has been investing heavily in ports, including a $1.5 billion Chinese-financed new port in the southern district of Hambantota.

Wickrama said proceeds from the first bond sale would be used to repay a series of yen-denominated loans, which have become expensive with the Japanese currency's sharp rise over the past year.

Sri Lanka had borrowed 46.6 billion rupees ($367.65 million) worth of loan from Japan between 1985 and 1996. As of December, it has repaid only 36 billion rupees of the capital and 18 billion rupees as interest payments.

By end April, the total outstanding Japanese loan stood at 28 billion yen ($348.35 million).

The second bond issue will be used to financed expansion of the main Colombo port as well as construction of a port city in the capital, Wickrama added.

The port authority has mandated HSBC as one of its lead managers and it will have to select at least another for the first bond issue in July, he said.

Bank of Ceylon raised $500 million via a benchmark 5-year paper at a yield of 6.875 percent, the tight end of the 6.875-7 percent guidance, and was oversubscribed by 7.7 times.

"Given the appetite for Bank of Ceylon bond, I think Ports (Authority) also will see an attractive yield due to the expansion in the ports business," said a Colombo-based analyst on condition of anonymity.

source -

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