Sri Lanka raises one billion dollars at 6.25 percent

Sri Lanka raises one billion dollars at 6.25 percent


July 21, 2011 (LBO) - Sri Lanka raises has sold a 10-year sovereign bond at 6.25 percent to raise one billion dollars from international markets, a source close to the deal said.


The deal had attracted 7.0 billion dollars in subscriptions, indicating strong demand. Orders were high
This was the fourth sovereign issue by Sri Lanka. The country has previously sold two 500 million dollar tranches and one billion dollar tranche.

The last bond was also priced at 6.25 percent. US 10-year Treasuries are now around 2.96 percent.

In late September 2010 US 10-year Treasuries were yielded around 2.54.

Sri Lanka recent got a rating upgrade, but it is also balanced against turmoil in international bond markets, analysts said.

Sri Lanka’s sovereign rating raised

Sri Lanka’s sovereign rating outlook was raised to positive from stable by Moody’s Investors Service, which cited a “peace dividend” of greater economic and financial stability.
Sri Lanka’s improved credit assessment comes as the island plans to raise $1 billion from the sale of dollar-denominated bonds in its fourth international offering. The nation’s foreign-currency rating remains at B1, four levels below investment grade. Standard & Poor’s upgraded the island’s credit rating by one level to B+ on Sept. 14.
The country may be able to attract more foreign funds and lower its borrowing costs, further bolstering economic growth after the end of a three-decade civil war against separatist Tamil Tiger rebels. The risk premium on emerging-market debt has shrunk to 3.14 percentage points from 8.91 points during the global financial crisis, according to an index compiled by JPMorgan Chase & Co. (JPM)