Done Deal

Oct 25, 2013 (LBO) – Sri Lanka’s DFCC Bank has raised 100 million US dollars from an international bond at yield around 9.6 percent, market sources said. The DFCC deal went to the market with a price guidance of 9.625 percent, and faced tough conditions, taking more than two days to close.

According to earlier reports DFCC was hoping to raise 250 million US dollars for 5-years.

Most of the money was expected to be loaned to the state and some used to roll-over maturing debt.

The bonds were rated ‘B’ by S&P and ‘B+’ by Fitch.

Fitch has warned about excessive foreign borrowings by the state. There had also been concerns about private banks being encouraged to borrow abroad.

DFCC is expected to get a 75 percent forex risk cover from Sri Lanka’s central bank for the bond, prospective investors in the bond was told.

State-run National Savings recently went raised 750 million US dollars at 8.875 percent for 5-years setting a benchmark for quasi-sovereign debt.

Conditions in global bond markets have tightened in recent months with several years of euphoria over speculative emerging market debt, fired by loose Federal Reserve