Sri Lanka aims for better rating before $1 bln bond sale

May 21, 2011 (AFP) - Sri Lanka is hoping for a better credit rating to boost its plans to sell a $1 billion sovereign bond this year, an official said Saturday, ahead of a visit by ratings agencies. The Central Bank's deputy governor Dharma Dheerasinghe said the agencies, Standard and Poor's, Fitch and Moody's, will begin a visit to the island next Monday to assess its financial health.

"We have a better credit story to tell now," Dheerasinghe told AFP, comparing his country's current economic fortunes with those during the decades-long ethnic conflict with Tamil Tiger rebels which ended in May 2009.

"The economy is growing steadily," he said. "We hope there will be an improvement in our rating after the review."

The island's $50-billion economy is tipped to grow at a record 8.5 percent this year, up from a 32-year high of 8.0 percent posted in 2010.

The bank has set its sights on Sri Lanka achieving a rating of at least "BBB" -- just one notch below investment grade -- by 2014 to allow it to borrow at cheaper interest rates on the international market.

Sri Lanka currently has a "B" grade -- five notches below investment grade -- from global ratings agency Standard and Poor's.

The central bank deputy governor said the planned bond will carry a tenure of 10 years or more. He added that roadshows have been lined up in June in London, Singapore and New York.

The bond, which will help pay off debt and raise cash for infrastructure investments, is expected to be issued in July but no firm date has been set.

It will be Sri Lanka's fourth international bond offering, known as a eurobond, since it first tapped foreign capital markets in 2007.
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The island has also raised money through short-term loans and syndicated loans to meet its budgetary needs.

"The government hopes to use some of the upcoming bond proceeds to retire expensive debt and fund infrastructure projects," Dheerasinghe said.

Sri Lanka has used part of the proceeds of earlier bond sales to pay for a raft of infrastructure projects to rebuild the war-torn north and eastern regions that were virtually flattened during the conflict.

The bank's governor, Nivard Cabraal, said Friday that the government aims to pump large sums into the war-hit regions to improve sanitation, water supply, power, roads, irrigation and health care.
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From 2011 to 2013, some 251 billion rupees ($2.2 billion) would be spent in the north, while another 51 billion rupees is planned for 2011, he said.

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