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Friday, 26 September 2014 00:53 - - {{hitsCtrl.values.hits}}
The Securities and Exchange Commission (SEC) has given approval to Sri Lankans living overseas to invest in the Ceylon Dollar Bond Fund (CDBF), thereby extending the opportunity to Sri Lankan diaspora communities and expatriate workers domiciled abroad.
CDBF, rated BB- by Fitch Ratings, targets attractive yields available on Sri Lanka Dollar Bonds while giving investors easy access to cash whenever required.
Ceylon Asset Management Ltd. (the managing company of CDBF) Managing Director Dulindra Fernando outlined the importance of attracting retail investors into the CDBF over the next few years.
“The Sri Lankan diaspora community has not been adequately penetrated to participate in our capital markets. The estimated 3.4 million Sri Lankans living overseas is a significant number, but it has still not been engaged to benefit from the best five growth years of our economy that lie ahead. We have to win the confidence of certain sections of the diaspora community who are disassociated from our country,” he said.
CAM targets Sri Lankans living or working abroad to invest, as India has successfully attracted non-resident Indians (NRIs) to invest in Indian capital markets. Due to the rupee volatility and political differences in the past, Sri Lankans living abroad chose to invest their capital in foreign banks, property and markets, which offer increasingly low returns.
The Ceylon Dollar Bond Fund offers a transparent vehicle for USD savings to invest in Sri Lankan bonds denominated in US dollars. While enhancing USD returns for Sri Lankan non-residents it provides foreign capital to the economy. The Initial Public Offering (IPO) period is up to 31 October and during this period the unit price will be held at $ 1, while the minimum investment is $ 1,000.
Following the SEC approval, the Embassy of Sri Lanka in the US organised a conference for Sri Lankans living in Washington DC, on 5 September 2014. During the presentation CAM Director and Economic Advisor Michael Preiss opined that: “Western capital markets with high liquidity offer low economic growth and highly-valued markets in equity and property, while interest rates are often below 1%. Sri Lanka on the other hand offers high economic growth, attractive returns and competitive valuations, but offers low liquidity. We expect Sri Lanka to reach a BBB investment grade country rating before 2020, and the most amount of money is made on bonds when a country moves from BB to BBB.
“We are most grateful to the SEC for the visionary support provided in building the infrastructure for Sri Lanka’s capital market development. Entering the dollar investment industry is a very exciting development for Sri Lanka’s fund managers, as we reach into the larger capital pool across the world.”
Preiss also thanked Sri Lankan Ambassador to the US, Prasad Kariyawasam, the Sri Lankan Embassy’s in Washington DC’s Minister (Commercial) Bandula Somasiri and its staff for taking the initiative to help develop Sri Lanka’s capital markets.
He revealed that there was an overwhelming response from “Sri Lankans living in Washington DC and Los Angeles who are proud of the island’s emergence in the global economy, in addition to the attractive returns available through the Ceylon Dollar Bond Fund.”
