Sri Lanka secures lowest rate as $ 500 m Sovereign Bond draws $ 4.2 b bids
Wednesday, 9 April 2014 00:54
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Sri Lanka has managed to raise $ 500 million at the lowest rate among all five-year international sovereign bond issuances to date thanks to heavy demand worth $ 4.2 billion.
The Central Bank said yesterday on behalf of the Government it successfully launched and priced a $ 500 million five-year International Sovereign Bond (Issue) on 7 April 2014 at a yield of 5.125% per annum which was the lowest among all the US dollar benchmark offering by Sri Lanka in the international bond markets.
The issue represents the balance of the $ 1,500 million approved International Sovereign Bond program for 2014.
The Issue was the seventh benchmark offering by Sri Lanka since 2007. Citigroup, The Hongkong and Shanghai Banking Corporation Ltd. and Standard Chartered Bank acted as Joint Lead Managers/Bookrunners on the transaction.
Fitch Ratings, Moody’s Investors Service and Standard and Poor’s have rated the Issue at ‘BB-’, ‘B1’ and ‘B+’ respectively.
The Issue was announced during the Asia afternoon on 7 April, 2014 with an initial price guidance of 5.50% per annum. With the post announcement interest from investors across Asia, Middle-East, Europe and the USA, Sri Lanka priced the Issue at a yield of 5.125%. This tighter yield reflects the continued confidence that the international investors have placed in the sovereign bond issuance of Sri Lanka.
The final order book stood at $ 4.25 billion, an oversubscription ratio of 8.3 times, from 287 accounts, achieved within a six-hour bookbuild period. Distribution of investors was very well diversified, with Asia taking 32%, Europe 22% and the US at 46%. Global Fund Managers were the largest investors in the transaction, representing 81%, with banks, private banks and insurance agencies taking 13%, 3% and 3% respectively.
Driven by the support from existing and new investors, Sri Lanka succeeded in establishing a new benchmark for five-year funds which is substantially lower compared to the previous Issuances. Sri Lanka’s previous five-year Issuances in 2007, 2009 and January 2014 were priced at yields of 8.25%, 7.40% and 6.00% respectively. This achievement is all the more impressive, given the rising bench mark US Treasury yield and also the high volatility seen in global capital markets in recent months.
FT Key Take
The final order book stood at $ 4.25 billion, an oversubscription ratio of 8.3 times, from 287 accounts, achieved within a six-hour bookbuild period.
Distribution of investors was very well diversified, with Asia taking 32%, Europe 22% and the US at 46%. Global Fund Managers were the largest investors in the transaction, representing 81%, with banks, private banks and insurance agencies taking 13%, 3% and 3% respectively.
