SriLankan Airlines bond issue flies high

Monday, 30 June 2014 00:00 - - {{hitsCtrl.values.hits}}

Achieves new benchmark rate with $ 175 m bond with the help of Standard Chartered Bank
Issue draws massive $ 3 b demand, a record 17 times oversubscription; 85 investors participate
Pricing of 5.3% for year bond lowest to date in international market by a Sri Lankan corporate or bank

SriLankan Airlines said yestedray it has successfully priced a $ 175 million international bond issue on 23 June, which was guaranteed by the Democratic Socialist Republic of Sri Lanka, due 2019, at a pricing of 5.3%.

Standard Chartered Bank has continued to strengthen its partnership with SriLankan Airlines and was privileged to act as the sole book runner for this highly successful and inaugural international bond issue of the airline. This is the lowest rate achieved to date, in the international market, by a Sri Lankan corporate or bank. The proceeds from the bond will help support the carrier’s re-fleeting and working capital requirements. The strong anchor interest and support from investors followed a highly successful international road show that covered Singapore, Hong Kong and London and meant SriLankan Airlines was able to price the US dollar transaction at a very competitive rate despite a modest size issuance. The order book witnessed exceptionally good interest from institutional investors. The final order book was $ 3.0 billion from 85 participants and was oversubscribed by a record 17.0x.

Colin Pawley, Head of Corporate and Institutional Clients, Standard Chartered commenting on the bond issue said: “Standard Chartered is proud to support the development of the national carrier and in turn the economy. This sets a new benchmark for Sri Lankan issuers and has paved the way for other entities to tap the international capital markets. Our on the ground presence linked to our international capabilities really helped to ensure this issue was a great success.” “Confidence in the country” SriLankan Airlines CEO Kapila Chandrasena stated: “We are very pleased with the interest shown by international investors in the airline and equally important is the fact that this amply depicts the confidence that the investing community has in the country.” Dushan Casie Chetty, Director, Head Local & Global Corporates, Standard Chartered who accompanied senior SriLankan management on the

road show stated: “SriLankan Airlines was able to leverage on the strong rally GoSL outstanding bonds had witnessed since they were priced earlier this year to garner strong investor interest and price the transaction at a tight premium of 50 bps over the fair value of a new five year issuance by the sovereign. Once again we are privileged to support SriLankan Airlines with whom we have had a long history of association, and as an international bank we believe we are well positioned to provide such services to the airline as it aims to realise growth prospects.” Yasantha Dissanayake, Head of Finance of SriLankan Airlines said: “The response we received for this debut issue is indeed most encouraging and it opens up new avenues of financing for the Airline in the future when it focuses on re-fleeting and modernisation.”