Sri Lanka raises US $ 2bn from bond markets

• CB says testament to int’l investor confidence in Sri Lanka
• Raises US $ 500mn in 5-year bonds and US $ 1.5bn in 10-year bonds
• Five-year bond sold at 6.35% and 10-year bond at 7.55%
• Highest bond allocation to US followed by Europe and EMEA
• Sri Lanka went to capital markets in 3 months for second time

 
Sri Lanka raised US $ 2 billion from U.S. dollar bond markets on Monday, which the country’s Central Bank said is a testament to the international investor community’s continued support for Sri Lanka and their confidence in the country’s economic fundamentals and long-term growth prospects.
Sri Lanka sold US $ 500 million 5-year and US $ 1.5 billion 10-year bond with maturity dates of June 28, 2024 and March 28, 2030 respectively.
This represents Sri Lanka’s fourteenth U.S. dollar benchmark offering in the international bond markets since 2007, and its second transaction this year.
The 5-year bond was sold at 6.35 percent down from an initial price guidance of 6.60 percent and final price guidance of 6.40 percent, while the 10-year bond was priced at 7.55 percent, down from an initial price guidance of 7.80 percent and final price guidance of 7.60 percent, representing price tightening of 25 bps from initial guidance, for each of the tranches.
In March, Sri Lanka sold US $ 1 billion five-year bonds at 6.85 percent and US $ 1.4 billion of 10-year bonds at 7.85 percent.
The bonds have been rated ‘B2’, ‘B’ and ‘B’ by Moody’s Investors Service, Standard and Poor’s and Fitch Ratings respectively.
“The long 10-year tranche marks the longest tenor issuance to-date in the international market, underlining the international investor community’s continued support for Sri Lanka and their confidence in the country’s economic fundamentals and long-term growth prospects,” the Central Bank statement said.
“Also, the long 10-year tranche has been appropriately defined in line with Sri Lanka’s future debt service obligations and debt management strategy,” it added.
BOC International, Citigroup, Deutsche Bank, HSBC, J.P. Morgan, SMBC Nikko and Standard Chartered Bank acted as Joint Lead Managers and Bookrunners for the transaction.
The Central Bank said the final orderbook of the bond issues stood at Rs.6.2 billion— over US$ 1.8 billion across 165 accounts for the 5-year tranche and over US$ 4.4 billion across 290 accounts for the long 10-year tranche—over three times the amount raised, “clearly highlighting global investors’ continued confidence in Sri Lanka and their positive outlook on Sri Lanka’s economic growth story.”
 
The orderbook was well diversified across both tranches.
The 5-year tranche saw the allocations of 30 percent to the U.S., 50 percent to Europe, Middle East and Africa (EMEA), and the remaining 20 percent to Asia. By investor type, the split was 80 percent to fund managers, 9 percent to insurance, pension funds and corporates, 8 percent to bank treasury and 3 percent to private banks and other investors.
The long 10-year tranche saw allocations of 44 percent to the U.S., 40 percent to EMEA, and the remaining 16 percent to Asia. By investor type, the split was 87 percent to fund managers, 6 percent to insurance, pension funds and corporates, 5 percent to bank treasury, and 2 percent to private banks and other investors.