SriLankan Airlines govt guaranteed debt draw US$3bn in orders

(From L-R) Hussain Sadique –Chairman, SLRA / Group Director, Hameedia, Mano Tittawella –Senior Advisor, Ministry of Finance & Media, Ajith Amarasekera- Director, SLRA / CEO Swarnamahal, Leonard Michael Perera, Founder Convenor & Head of Business, SLRA Dinesh Perera-Director, SLRA / Deputy Director, Abans

June 30, 2014 (LBO) – A 175 million US dollar debt offer by state-run SriLankan Airlines drew orders worth 3.0 billion US dollars from 85 parties, the carrier and book runner Standard Chartered Bank said. Sri Lankan Chief Executive Kapila Chandrasena said international investors had shown interest in the airline and it showed the confidence placed on the country by them.

The airline sold the 5-year bonds at 5.3 percent, with an explicit government guarantee, 175 basis points higher than the 5.125 percent the government itself paid for a 500 million US dollar sovereign bond in April.

Dushan Casie Chetty, Director, Head Local & Global Corporates, Standard Chartered said it was price at only 50 basis points higher than the current ‘fair value’ of 5-year sovereign bonds.

“This sets a new benchmark for Sri Lankan issuers and has paved the way for other entities to tap the international capital markets,” Colin Pawley, Head of Corporate and Institutional Clients, Standard Chartered said.

The government however has been unwilling to guarantee debt of other issuers, encouraging them to go to the market on the strength of their own balance sheet. The funds will be used for working capital and re