If we are going for a sovereign bond, better to go early: CB Governor


Jan 04, 2018 (LBO) – Central Bank Governor Indrajit Coomaraswamy says if Sri Lanka wants to issue a sovereign bond this year, it is better to issue it as early as possible for three reasons.

“One is that there are maturities at the beginning of the year in terms of ISBs,” Coomaraswamy told reporters Wednesday.

“Secondly, the consensus seems to be 3 US interest rate hikes this year. So the earlier you go the better it is. Thirdly, if we bring significant amount of money, it reduces the pressure on interest rates & exchange rates.”

Cabinet nod has already been received to raise 2 billion US dollars through International Sovereign Bonds (ISBs) this year.

“There are no ISB maturities this year, but there are about 600 million interest payments for the existing ISBs,” Deputy Governor C J P Siriwardena said.

“Even though cabinet approval granted, still not decided, how much will be raised from ISBs; it’s up to the Monetary Board and Finance Ministry.”

Cabinet has also approved a proposal to raise 3 billion US dollars (Rs456bn) through Sri Lanka Development Bonds (SLDBs) in 2018.

“There are 2.5 billion SLDB maturities this year and that will be going for the roll over,” Siriwardena explained.

“If necessary, assuming that dollar surpluses in the banking system, we will go up to 3 billion to collect the balance 500 million to finance the budget, especially for the development program.”