Sri Lanka sells US$500mn bonds at 5.125-pct; oversubscribed 8.3 times

Apr 08, 2014 (LBO) – Sri Lanka has sold a 500 million dollar 5-year bond to yield 5.125 percent a year, lower than a 6.0 percent paid in January, with the offer oversubscribed 8.3 times. Fund managers took 81 percent of, banks 13 percent, private banks 3 percent and insurers 3 percent.

Sri Lankan bonds have now also become more liquid in secondary markets with active trading, which analysts say is also a point in favour.

The bond was initially offered at a price guidance of around 5.5 percent but was narrowed later to 5.125 – 5.25 percent levels amid strong orders.

A 5-year bond sold in January was trading around 4.8 to 4.9 percent in the run up to the latest sale.

Update III “This tighter yield reflects the continued confidence that the international investors have placed in the sovereign bond issuance of Sri Lanka,” Sri Lanka’s Central Bank which manages debt sales for the Treasury said in a statement.

US investors bought 46 percent of the bonds, Asia 32 percent and Europe 22 percent.

The bond drew strong orders with 4 billion US dollars of orders being topped shortly after US markets opened, financial market sources said.

Citigroup, HSBC and Standard Chartered managed the sale.

Analysts say Sri Lanka investors in Sri Lanka’s bonds were now familiar with the issuer and it helped draw strong interest, with several new investors coming in. Orders of 4.25 billion US dollars had come from 187 accounts.