Sri Lanka on track to wrap international offering by October

Aug 18, 2009 (LBO) – Sri Lanka will shortly call for bids from international investment banks to help raise debt from international markets, with the deal to be completed by October, a top official said. A team of government officials went on a ‘non deal’ global road show to major financial centres arranged by HSBC and JP Morgan.

“We will be calling for bids from international investment banks,” Central Bank governor Nivard Cabraal said.

“Everyone will get the opportunity to bid.”

Central Bank Governor Nivard Cabraal said the final decision on the quantum of the debt would be released shortly.

In 2007, HSBC and JP Morgan helped Sri Lanka raise its maiden 500 million US dollar sovereign bond. Sri Lanka is now going back to the markets backed by a 2.6 billion US dollar International Monetary Fund loan.

A senior official from the government’s debt office, which is also a unit of the Central Bank, had said that Sri Lanka was looking to float a 500 million US dollar sovereign bond, rather than a syndicated loan.

The Central Bank has been cutting rates in a bid to boost growth.

A fall in revenue has expanded the government’s fiscal deficit to higher than expected levels, though authorities are aiming for a 7.0 percent of gross domestic product deficit by the end of the year.

An injection of foreign money will also help boost growth which had flagged to 1.5 percent in the first quarter.