5 percent of its billion US dollar bond, which was issued at 6.25 percent but was trading at a slightly lower rate.
"The government will use the proceeds from the bond issue to finance its current infrastructure and to restructure a part of the existing debt stock of the government to improve overall public debt management.
" The central bank said in a statement that global investors’ demand for the bond exceeded 6.3 billion dollars within 14 hours of opening on September 27, 2010, being over-subscribed by more than six times.
The bond issued at 6.25 percent was quoted at slightly lower rate in the secondary market at a capital gain, indicating high demand, according to Bloomberg newswires data.
The bonds, maturing in October 2020, will be listed on the Singapore exchange.
It was the island's third international sovereign bond offering, following issues in 2007 and 2009.
The central bank said the demand underscored "the high global investor confidence based on the recent progress and the future prospects in the Sri Lankan economy since the end of the conflict in the country.
"
The island's 30-year ethnic war ended in May 2009, resulting in an economic recovery with growth forecast at between 7.5 to 8.0 percent for 2010.
Orders were received from 362 investors globally with 25 percent of the bonds being allocated to investors in Europe, and 22.
5 percent to investors in Asia.
By investor type, 85 percent of the bonds were allocated to fund and asset managers and the balance to pension funds, insurance companies and banks, the central bank said.
The current coupon rate of 6.25 percent for the 10-year sovereign bond is significantly lower than the cost of borrowings as compared to the previous two international offerings in 2009 and 2007, it said.