New World Securities attracts Rs. 2 b Japanese investment into Govt. bonds

In a major breakthrough in financial services industry, New World Securities Ltd. has succeeded in attracting over Rs. 2 billion worth of Japanese investments so far in to Government bonds with more on the cards.

“We have successfully drawn around Japanese Yen 1.2 billion (over $ 15 million in face value) funds into Government securities by early this week and we hope to attract more Japanese investments to both debt and equities market,” New World Securities Director and CEO Viraj Malawana told the Daily FT yesterday.

The Japanese investment in to Government bonds (mainly seven year tenure), had been completed within a week via New World Securities partners in Tokyo. The company is working with Bansei Securities Ltd., which is a member of the Tokyo Stock Exchange.

Malawana said the success follows New World Securities late last year undertaking a Sri Lanka promotion in Tokyo in partnership with Sri Lanka’s Embassy. “Last year during a meeting between President Mahinda Rajapaksa and broking community, there was a request made for brokers to go out and promote investments in to Sri Lanka. The road show in Tokyo was part of our efforts. We saw an opportunity to market Government securities market for interested Japanese investors. We are happy with our endeavours so far,” Malawana added.

He also said that funds which have come so far as well as interest shown reflect growing confidence by Japanese investors. “We are confident more Japanese investments will flow into Government bonds as well as to the Colombo stock market as prospects improve,” Malawana added.

New World Securities has appointed Pan Asia Bank PLC as the leading trustee for settlement purposes of Japanese investments in to Government bonds. Pan Asia Bank Chairman Nimal Perera said that the role is a first for the Bank and would help boost fee-based income. Perera, who also attended the Tokyo road show last year, expressed confidence that more investments would flow from Japan.

New World Securities is owned 80% by Japanese investors and spearheaded by Japan’s a2Media Corporation with Chairman being Takashi Igarashi, and 15% by Sri Lankan investors.

Igarashi said Japanese have found yields (currently double digit) in Sri Lankan bonds very attractive. “With increased marketing by us and our partners in Japan, we expect a greater number of Japanese investors to look at both debt and equities,” he added.

At present foreigners can invest up to 12.5% of the Government bonds. Foreign Ministry in a separate statement said Bansei Securities, was planning to invest 10 billion Japanese yen ($ 125 million) in Sri Lanka Government T-bills and T-bonds over the next 12 month period.

According to Reuters as of 20 June, foreigners held 10.6% or Rs. 323.2 billion ($2.4 billion) worth Sri Lanka Government securities out of the total outstanding Rs. 3.05 trillion ($22.84 billion) worth T-bills and T-bonds, the latest Central Bank data showed. Yields on T-bills have been rising since early this year with both 182- and 364-day T-bill yields at two-year high of 12.47% and 12.78%, respectively, at the last weekly auction.

New World Securities in early December 2011 undertook what was the first ever investment promotion exercise. It included a an investor forum and one to one business meetings for the delegation from 10 Sri Lankan companies as well as visits to and presentations by the Tokyo Stock Exchange and securities firms in Japan.

Sri Lanka’s Ambassador in Japan Admiral Wasantha Karannagoda had extended his fullest support to New World Securities’ initiative and was also the Chief Guest at the Investor Forum.