Aug 01, 2016 (LBO) – Sri Lanka’s Central Bank Deputy Governor says there is an ample demand among insurance companies, provident funds and other institutional investors in the country for higher yielding new financial instruments.
Delivering a keynote address, Deputy Governor Nandalal Weerasinghe highlighted that Sri Lanka needs to further deepen the corporate debt market to fulfill the additional funding needs faced by local corporates.
“There is likely to be plenty of demand among insurance companies, provident funds and other institutional investors for higher yielding new financial instruments,” he stressed.
“Therefore instruments such as, hedging, credit guarantees, local currency bonds issued in the international market would help investors to find new methods and ways to finance their funding needs.”
The Deputy Governor said local currency solutions would mitigate the risk and generate cheaper funding with a minimum currency risk, while providing guidance on funding.
Weerasinghe was speaking at a recent seminar jointly organized by Netherlands-based Currency Exchange Fund (TCX), GuarantCo, FMO – the Dutch Development Bank, and Frontclear together with locally based investment bank First Capital Holdings.
The main focus of the event was to raising awareness among local banks, NBFIs and micro finance institutions about foreign currency funding options and facilitating them to access funding from development financial institutes and foreign investors.
Senior Vice President of TCX, Jerome Pirouz drew attention to their role in Sri Lanka through supporting local currency inflows from offshore investors.
He explained that the firm hedges the currency and interest rate mismatch which is created in cross-border investments between international investors and local market participants in frontier and less liquid emerging markets.
Matthijs Pinxteren, Director Treasury FMO, said the company intends to further expand their presence in Sri Lanka inline with the economic progression of the country.
They are currently promoting private sector growth in more than 85 developing countries including Sri Lanka offering capital knowledge and networks.
Frontclear Senior Vice President Andrei Shinkevich addressing the gathering explained their role as a facilitator providing access to financial markets through the provision of credit guarantees to cover their counterparty credit risk.
He said the company also provides technical assistance with product implementation and systemic constraints which are beneficial for emerging markets.