"We have taken short term loans on high interest and we want to set off those."
Short term loans have floating interest rates - usually based on the 6-month Libor rate - while sovereign bonds have fixed coupons priced over US Treasury yields of equal maturity.
In 2009 Sri Lanka raised 500 million US dollars at 7.4 percent for five years and a 300 million loan was settled shortly after.
Sri Lanka has borrowed through short term loans, syndicated loans and its 30-year war which ended in May 2009 was funded partly with supplier's credits.
Rambukwelle said he had no information on the tenor of the bond or the exact timing.
C P J Siriwardene, an assistant governor of the Sri Lanka's Central Bank who oversees state debt, told Bloomberg newswires that Sri Lanka was looking to sell a bond of up to 10-years in maturity.
So far Sri Lanka has sold two 500 million dollar 5-year bonds.
Earlier this month the Central Bank appointed HSBC, Merrill Lynch and Royal Bank of Scotland as rating advisors.
A source familiar with the rating advisory group said the actual bond sale which was likely to be positioned as a 'liability management issue' may come towards the end of the third quarter of 2010 but most likely after getting a rating upgrade.
At least a one notch upgrade in the sovereign rating was expected, the source said.
A higher rating allows a country to borrow cheaper.
Standard & Poor's which has rated Sri Lanka a speculative 'B' has said that a rating upgrade may be possible after Sri Lanka signed a deal with the International Monetary Fund to keep government spending in check and inflation low.
Sri Lanka wants to lift its credit rating to investment grade or at least 'BBB' by 2014.