HSBC partners with GoSL for first dual-tranche sovereign bond issuance

The Central Bank of Sri Lanka (CBSL), on behalf of the Democratic Socialist Republic of Sri Lanka, successfully launched and raised USD1.5 billion in a dual-tranche 5 and 10 year bond. The size of the new 5.5 year bond was USD500 million with a coupon of 5.75% p.a. maturing in 2022.

The size of the new 10 year bond was USD1 billion with a coupon of 6.825% p.a. maturing in 2026. This marks the first sovereign bond issue in the international capital markets in 2016 by Sri Lanka, and the tenth US dollar benchmark offering in the international bond markets by the Sovereign. This is also the first ever dual-tranche issuance by the Government of Sri Lanka.

HSBC was the Joint Lead Manager, Bookrunner and the Ratings Advisor for this bond issuance and the only bank in Sri Lanka to consecutively partner with the sovereign on all its bond issuances. HSBC has also been consistently ranked as the No.1 Debt Capital Markets Bookrunner in Asia.

Patrick Gallagher, CEO HSBC Sri Lanka and the Maldives said, “In accessing two parts of the curve simultaneously, the sovereign has demonstrated its ability to remain nimble and responsive to investor needs. The engagement from different pockets of interest at the short-end and long-end further demonstrates the breadth of the sovereign’s investor base and confirms its position as a premier issuer in the capital market.

HSBC’s partnership with the Government of Sri Lanka in this landmark dual-tranche issuance is a testament to our expertise in closing large capital market transactions. Retracing our 124-year history in Sri Lanka, this also manifests HSBC’s strong and continued commitment to the country.”

Fitch Ratings, Moody’s Investors Service and Standard and Poor’s have rated both the Issues at ‘B+’, ‘B1’ and ‘B+’ respectively. The final order books stood at USD2.5 billion and USD3 billion for the 5 and 10 year issuances respectively, with an oversubscription ratio of 3.6 times. The numbers remain impressive, given the high volatility seen in global capital markets in recent months.

Shamindra Marcelline, Head of Financial Institutions Group, HSBC Sri Lanka said, “This dual-tranche issuance is a landmark transaction and clearly reflects the continued confidence placed by the international investor community in the country’s strong credit story. This also demonstrates the strength of our long standing partnership with the sovereign in navigating the current global financial uncertainties and challenges posed”.

The HSBC Group serves over 47 million customers through four global businesses: Retail Banking and Wealth Management, Commercial Banking, Global Banking and Markets, and Global Private Banking. The Group serves customers from over 6,000 offices in 71 countries and territories in Europe, Asia, North and Latin America, and the Middle East and North Africa.

With assets of 2,596 billion dollars at 31 March 2016, HSBC is one of the world’s largest banking and financial services organisations. (Press Release)