Extra $ 34.5 m demand for Govt.’s $ 100 m Development Bonds offer

The Government’s US$ 100 million Development Bonds issue had drawn bids worth US$ 134.5 million, the Central Bank said yesterday, reflecting higher demand.

The Central Bank of Sri Lanka, on behalf of the Government of Sri Lanka, offered to issue Sri Lanka Development Bonds (SLDBs) of US$ 100 million to eligible investors for subscription at a rate of US$ six month LIBOR plus a margin to be determined through competitive bidding.



The offer was opened from 13-21 June 2011 for bidding with the settlement on 29 June 2011. Both foreign and local commercial banks bid at the auction with the total bids received amounting to US$ 134.5 million.

The Central Bank said of the bids received, the Government decided to accept US$ 103.5 million in three-year maturity and US$ 23 million in four-year maturity at the market determined rates of US$ six month LIBOR + 365 bps (weighted average margin) and six month LIBOR + 375 bps (weighted average margin), respectively. Today, the US Dollar 6 month LIBOR rate is 0.39 per cent.

The SLDB issue was executed in terms of Section 2 (a) and 2 (c) of the Foreign Loans Act No. 29 of 1957 as amended, and the funds mobiliszed through the new SLDB issuance are to be used to settle maturing SLDBs of US$ 125.8 million.

The SLDBs are transferable by endorsement, delivery and registration with the Superintendent of Public Debt of the Central Bank of Sri Lanka. Eligible investors may purchase SLDBs in the secondary market through Designated Agents appointed by the Central Bank of Sri Lanka.