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Monday, July 25, 2011

Record 321 investors for US $ 1 b bond issue

Ravi LADDUWAHETTY

A record 321 investors from the United States, Europe and Asia have vied for the just concluded US $ 1 billion Sovereign Bond issue, oversubscribed by 7.28 times personifying the confidence of international investors on the growth prospects and vibrant performance of the Sri Lankan economy.

The issue was so successful that there were 321 institutional and individual investors who were enthusiastic and upbeat about the economy that they subscribed 7.28 times of the issue raising US$ 7.28 billion and there was even a high net worth individual who wanted to subscribe to the entire issue single handedly, Central Bank’s Senior Deputy Governor Dharma Dheerasinghe, who was also in the visiting team, told Daily News Business yesterday. He said the apportionment of the bond has been 43 percent among the US investors, 30 percent among European investors and 27 percent among Asian investors.

The ten member team led by Central Bank Governor Ajit Nivard Cabraal and comprising Central Bank and Treasury officials participated in road shows in Singapore, Hong Kong, Los Angeles, Boston, New York and London and the investor sentiments were reflected in the numbers by which the issue was oversubscribed.

The Senior Deputy Governor also said the interest rates offered this time was also more attractive than 2010, despite the same value of the sovereign bond issue at US $ 1 billion and at the same rate of 6.25 percent.

Explaining this, he said the interest rate of 6.25 percent in fact was spread over and above the ten year US Treasury Bond rate this year was 3.34 percent against the 3.37 percent last year and as such the spread this year is tighter by 39 basis points. He also said the advantage accruing to Sri Lanka is in the backdrop of rising world interest rates. Sri Lanka has been issued with an international bond this year at interest rates tighter than 39 basis points, which has been buttressed by Sri Lanka’s credit story as projected by the three ratings agencies- Fitch, Moody and Standard and Poor.

A strong fiscal consolidation process is underway and the targeted budget deficit was at 6.8 percent.

Sri Lanka’s banking system has also been resilient with an improved performance in the macro-prudential indicators such as the Capital Adequacy Ratios and the Non Performing Asset Ratios.
source - www.dailynews.lk