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Sri Lanka looks for investors to raise US$ 100 million

August 31, 2006 (LBO) - Sri Lanka Thursday announced plans to raise another 100 million dollars through a bond issue to pay for ongoing development projects. Prospective investors can send in their applications from Sept 5-12 and those selected have to pay up by Sept 20, the Central Bank said in a public notice.

Investors have two options:
1. 50 million dollars - two-year tenures
2. 50 million dollars - three-year tenure

The bank is pricing the bonds at six months London Interbank offered rate or LIBOR plus a premium. Six months LIBOR is now trading at 5.



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5 percent.

Individuals and companies with accounts in the non-resident foreign currency banking units of Sri Lankan banks can buy the Sri Lanka Development Bonds (SLDB) from designated agents appointed by the Central Bank, Public Debt Superintendent C Premaratne said.

The Central Bank, which is raising the money on behalf of the government, said the funds will be channeled to build highways, generate power, port development, education, health and airport development work.


Earlier this month, the bank successfully raised 175 million dollars via three-year bond issue priced at 138.3 basis points over the six months LIBOR.

The bank said the response was overwhelming, with 322 million dollars in bids coming in when 150 million dollars was put up on offer.

A similar 50 million dollar 3-year bond issue in June was sold at the rate of 140 basis points over the six months LIBOR rate.

Thursday's announcement comes amidst artillery duels between government security forces and Tamil Tiger rebels over the Tricomalee port and Nordic truce monitors ruling that Sri Lankan troops had killed 17 French charity workers recently. President Mahinda Rajapakse is currently in London for talks with British premier Tony Blair, amid fears the nation was headed for full-scale war

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