$ 500 m Samurai bond likely at end-Nov.

Monday, 14 October 2019 00:30 - - {{hitsCtrl.values.hits}}

Cabinet-approved lead managers expected to take six weeks to conclude paperwork and pick appropriate time slot

The Central Bank is likely to issue its first $ 500 million Samurai bond to the Japanese market towards end November after Cabinet approved the lead managers last week.

Central Bank Governor Dr. Indrajit Coomaraswamy on Friday said it would take about six weeks for the bond to be issued after lead managers were appointed.

“Lead managers have been appointed and they will do the extensive paperwork and they are also expected to negotiate a very competitive fee from Japan Bank for International Cooperation (JBIC). They were very supportive when we visited them. So we hope to get a very good price. Once the paperwork is completed we have to look for a slot in terms of market conditions,” he told reporters.

Mizuho Securities Company Ltd., SMBC Nikko Securities Inc. and Mitsubishi UFJ Morgan Stanley Securities Co. Ltd. have been picked as the lead managers for the bond.

The Central Bank had earlier outlined plans to issue the bond to top up reserves and ride out any uncertainties created by the Presidential Elections in mid-November, even though Sri Lanka’s next large debt repayment is only due in October 2020.

In August, the Central Bank said it had consultations with JBIC, which had said it was willing to give a 95% guarantee and a flexible fee for the bond issuance. The Central Bank is hopeful this will drive down interest rates and enable to bond to be priced well.

The Central Bank is also allowed to raise up to $ 2 billion more under the Liability Management Act for debt repayments next year. Ratings agencies have estimated that Sri Lanka will have to repay an average of $ 3.5 billion per year till about 2023.

Sri Lanka is also heading to Presidential Elections on 16 November, which is likely to be just ahead of the bond issuance.

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