• Calls for RFPs by 30 November for appointment of arrangers 
• First-ever Securitised Financing Arrangement to be denominated in USD, Euro, RMB, Yen, or in any GCC currency
• Proceeds of SFA will be used to finance expenditure as approved in Budget

The Central Bank (CBSL) has decided to securitise the foreign currency receipts component from migrant workers and has called for Request for Proposals (RFPs) by the end of the month for the appointment of arrangers.

Sri Lanka receives around $ 7 billion in workers’ remittances annually. On the strength of this steady foreign currency inflow, the Government intends to raise medium-term foreign currency financing, by securitising foreign currency receipts of the CBSL under the mandatory sale of 10% of workers’ remittances converted into Sri Lankan Rupees by licensed banks. 

CBSL said since the introduction of this mandatory sale requirement on 28 May, an average of $ 25 million per month had been accumulated under this arrangement by the CBSL. With recent focused efforts to strengthen remittance flows by the CBSL in collaboration with stakeholder agencies, such inflows are expected to increase in the coming years.

CBSL said the proposed Securitised Financing Arrangement (SFA) would be denominated in USD, Euro, Chinese Renminbi (RMB), Japanese Yen (Yen), or in any Gulf Cooperation Council (GCC) currency. The SFA is expected to be raised at a fixed or a floating rate for a medium-term tenure. Repayment can be in bullet or in tranches, or on a reducing balance linked to the securitised arrangement, while interest can be paid periodically, as mutually agreed. 

“The proceeds of the SFA will be used for the purposes of financing the expenditure as approved in the Annual Budget,” CBSL said.

On behalf of the Government, CBSL has requested competitive proposals from banks/institutional investors/investment houses for consideration to be appointed as counterparts and/or arrangers for the proposed SFA. Banks/institutional investors/investment houses may submit proposals on a standalone basis or collectively.

The proposals should clearly delineate the following for evaluation: The amount and the designated currency/currencies in which the SFA is proposed; separate proposal/s to be submitted for different currencies and different options; and for each proposed SFA, cost expressed as a percentage per annum (fixed or floating), proposed securitisation structure, third party expenses and arrangement fee (if any), estimated lead time (detailed execution timetable), and any other relevant information.

When it comes to the commitment of banks/institutional investors/investment houses, the proposed composition of the dedicated core project team, and related experience of the dedicated core project team need to be included as well as the cost quoted is required to be firm at least for a period of 60 days from the closing date for submission of proposals.

In the case of Arrangers, the proposals in respect of this RFP shall be submitted by the legal entity proposed to be the Arranger.

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