Sri Lanka’s Central Bank has sought proposals from foreign and local banks to structure a dollar bond issue aimed at funding upcoming infrastructure projects, officials said Friday. Sri Lanka’s Central Bank has sought proposals from foreign and local banks to structure a dollar bond issue aimed at funding upcoming infrastructure projects, officials said Friday. Following twin shocks of a tsunami and surging oil prices, the government plans to sell around US$ 100 million in dollar bonds prior to securing a country rating from three rating agencies, Treasury Secretary P B Jayasundara said late Thursday.
Banks have been asked to send in their proposals by Oct. 12 and the Central Bank is hopes to select a lead manager two to three days later.
Once selected, the lead manager has six weeks to raise the cash.
“The mechanics of the issue will be decided once a lead manager is selected. The monies will be used to fund infrastructure projects like roads and highways,” Central Bank’s Deputy Governor W A Wijewardena told LBO.
“The issue could even end up as a syndicated loan, depending on what the lead manager recommends for us,” he said.
He said the tenure is likely to be between three to five years and will be sold to Sri Lankans living abroad. “We want to get them to participate in our development activities.”
Minimum subscription is likely to be kept at US$ 500 to encourage wide participation.
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.
“Tapping our people working abroad through this bond issue, is another avenue to mobilise remittances besides non-resident foreign currency deposits,” Jayasundera said.
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.
With tsunami related costs also piling up, Jayasundara says Sri Lanka has asked the Group of Eight industrial countries to extend its one-year debt moratorium for another twelve months.
G8 members waived off US$ 250 million due in interest payments this year. “We didn’t ask for a US$ 250 million debt moratorium. We have spent more than that out of our own pockets for tsunami relief,” Jayasundara said.
A one-year extension, he says, should not be accepted with many conditions, that could choke Sri Lanka’s recovery process.
“There is no point going behind donors. We are a middle income country. We must know how to balance our risks and go beyond the traditional balance sheets to test our strengths.”
-Mel Gunasekera: firstname.lastname@example.org