Sri Lanka urban bond raises Rs4.6bn at opening

Sept 24, 2010 (LBO) – A five-year bond issued by Sri Lanka’s Urban Development Authority (UDA), a state agency, to raise 10 billion rupees which opened Thursday has drawn 4.6 billion rupees, a stock exchange filing said. The UDA is issuing 50 million debentures at 100 rupees each, to be doubled if oversubscribed, to raise cash to resettle squatters occupying prime property in Colombo city owned by government and to free land for private sector commercial development.

The stock exchange filing by state-run Bank of Ceylon, which is managing the issue, said a total of 37 applications for 46,255,900 debentures had been received so far.

The bonds are to be listed on the main board of the Colombo Stock Exchange.

Officials have said 30 percent of the issue is open to foreign investors.

The money raised will be used to build alternative homes for unauthorized dwellers in 800 acres of high value state land in Colombo city.

Investors could chose between three interest options: 11.0 percent annual, 10 percent monthly or a floating rate of Treasury bill plus 75 basis points every six months.

The UDA said it would be able to build around 20,000 houses if 5.0 billion rupees was raised and around 65,000 if 10,000 billion rupees was raised.

P A Lionel, head of investment banking at Bank of Ceylon has said commitments for over 5.0 billion rupees had already been received before the issue opened and they were open to offers for 10 billion rupees.