Sri Lanka central bank says US$988mn raised at average yield of 5.261-pct

COLOMBO (EconomyNext) – The Central Bank of Sri Lanka said it had raised almost a billion US dollars through an international sovereign bonds and Sri Lanka Development Bonds (SLDBs) at a weighted average cost of 5.261 percent a year.

It launched and priced a 650 million dollar 10-year International Sovereign Bond at a yield of 6.125 percent per annum on Thursday, 28th May 2015.

“On the same day, the Central Bank issued 329 million dollars in SLDBs of 1 year 1 month maturity at a Weighted Average Margin (WAM) of 316.69 bps and 9 million dollars in SLDBs of 2 years 11 months maturity at a WAM of 353.89 bps, over 6 month London Interbank Offered Rate.

“Accordingly, a total of 988 million dollars was raised via International Sovereign Bonds and SLDBs at a weighted average cost of 5.261 percent per annum,” it said in a statement.

However analysts say the two bonds and their yeilds cannot be directly compared and averaged. SLDB’s have a floating coupon and is subject to interest rate risk (rates can change up when the Libor rate changes) and the shorter tenor floating rate notes have re-investment risk (rates can change when they come up for maturity)  while the longer tenor bonds have higher maturity risk.