October 17, 2006 (LBO) – Sri Lanka plans to raise 150 million dollars via a syndicated loan from foreign investors, the central bank said Tuesday a day after announcing that the country was opening its government bond market for overseas players. The bank said it hopes to raise the loan in November, but stopped short from disclosing the tenure or price of the syndication.
Monetary authorities are also issuing treasury bonds to foreign players from next Wednesday on condition that they hold the securities for at least one year.
Foreigners are currently allowed to invest in equities and Sri Lanka development bonds or dollar bonds issued by the government.
On Monday the bank said it was opening up five percent of the bond market for maturities over two-year for foreign players, in a bid to shore up overseas investments.
According to Central Bank figures, total outstanding government debt carrying maturities over two years, currently stands at 476 billion rupees. Non-residents could invest up to 24 billion rupees or about 230 million dollars, in treasury bonds, the bank said.
Sri Lanka’s official reserves now stand at 2.4 billion dollars which is sufficient to pay for three months of imports.
“This will further improve with the expected syndicated loan of 150 million dollars in November 2006, planned sale of Treasury bonds to non-residents commencing next week and other project related inflows in November and December 2006,” the bankâ€™s economic research department said in a statement.
“The banking system as a whole also maintains a net positive foreign exchange position in addition to their reserves of 1.4 billion rupees,” the statement adds.
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