Sri Lanka has picked Citigroup Inc., of US to lead arrange a US$ 100 million syndication loan for the government, Finance Minister Sarath Amunugama said Monday. Sri Lanka has picked Citigroup Inc., of US to lead arrange a US$ 100 million syndication loan for the government, Finance Minister Sarath Amunugama said Monday. Funds from the three year loan will be used to finance upcoming infrastructure projects, he told LBO.
Citigroup, who were among the five banks to send in proposals, have about a six to eight weeks to raise the cash.
The unrated issue will be fully underwritten.
“We have an unblemished track record for sovereign issues here. Each time Sri Lanka raised funds from the international market, they chose us,” said Kapila Jayawardena, Country Head Citibank NA.
Sri Lanka has tapped the international markets twice in the past – US$ 50 million in 1997 and US$ 100 million in 2003 – both issues were not rated.
Citigroup is also currently helping the government to secure its first sovereign rating, as the island looks to international debt markets to raise capital and attract investments.
Three international rating agencies – Fitch Inc., Moody’s Investor Services and Standard & Poor’s – have been mandated for the job.
The trio is expected to finish their work this month, and the government hopes to use the credit rating to raise dollar bonds in the international market next year.
The island is digging deep for extra cash after surging crude prices will see its oil import bill exceed US$ 800 million to US$ 1.5 billion this year, the country’s Treasury Secretary P B Jayasundara said in Sept.
Despite misgivings on the timing – a presidential poll and a budget – Jayasundara said the government is keen to encourage migrants to take part in the development process.
“Tapping our people working abroad through this bond issue, is another avenue to mobilise remittances besides non-resident foreign currency deposits,” Jayasundera said.
Amunugama said he hopes to shed more light on the migrant bond issue in Tuesday’s budget.
“There is a lot of petro dollars out there in the Middle East with oil prices doing so well,” he said.
A large chunk of Sri Lanka’s private remittances flows from some half a million locals working overseas, mainly in the Middle East.
According to Central Bank data, net private remittances were up 23 percent to US$ 1,075 million for the first eight months to Aug. 2005.
-Mel Gunasekera: email@example.com