Sri Lanka Telecom’s maiden US$ 100 mn five-year bond issue has been oversubscribed ten times, a spokesman for one of the lead managers said Friday. Sri Lanka Telecom’s maiden US$ 100 mn five-year bond issue has been oversubscribed ten times, a spokesman for one of the lead managers said Friday. Priced under seven percent the bond is the biggest issue so far for a Sri Lankan company in the international debt market.
“It’s a very significant transaction. We raised around a billion dollars in marketing time frame of two days and the company has planned to cut the five day roadshow into two days and price it,” said Rano B Mukherji, Head of South East Asian Debt Capital Markets for UBS Warburg AG.
Roadshows for the issue, which is jointly managed by Standard Chartered Bank and UBS Warburg, opened on Nov. 17 in Hong Kong, Nov. 18 in Singapore and was expected to move onwards to London on Nov. 19.
“There was overwhelming demand from investors. The bond coupon yield was closed at 6.875 percent, slightly lower than the initially rated seven percent,” he said.
The bond attracted investor interest from major leading institutions across the world. Mykherji credited SLT’s management for doing a brilliant job at the roadshow ‘as every single meeting was converted into an order.’
The dominant carrier waltzed off with a B+ rating for its foreign currency from Fitch Ratings and Standard & Poor’s, to become the first Sri Lankan entity to be internationally rated. Both ratings have stable outlooks.
The local currency rating exceeds the foreign currency by two notches as the local currency rating ignores currency convertibility risk.
The proposed issue will rank pari passu with the company’s senior unsecured liabilities.
They will mature in a single bullet at the end of five years from the date of issue, and the notes will carry a fixed semi-annual coupon.
Issue proceeds will enable SLT to expand its wireless network and refinance part of its debt.
Sri Lanka Telecom controls over 80 percent of the country’s fixed line market and is the second-largest capitalised firm on the Colombo Stock Exchange.
SLT is 49.5 percent owned by the Sri Lankan government and 35.2 percent by Japan’s Nippon Telegraph & Telephone Corp. The public owns 12.5 percent and the rest is in the hands of its employees.
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