Sri Lanka may get China Development Bank US$1bn loan within two months
ECONOMYNEXT – Sri Lanka may get one billion US dollars from a loan syndicated by China Development Bank in the next two months, an official source said.
The CDB was selected among international banks that bid for a request for proposals floated by Sri Lanka’s finance ministry for a 1.0 billion US dollar syndicated loan.
The funds may come in June or July after loan agreements go through legal formalities, officials say.
The CDB proposed to raise an 8-year loan compared to 3-year proposed by a group of four Western international banks that usually helps Sri Lanka with international bond offerings. The loan will also have a 3-year grace period.
The CDB’s offer came to around 5.4 percent, which was lower and the tenor was also longer, making the bid more attractive.
India’s Axis Bank also made a bid for a smaller amount.
In April Sri Lanka sold 5-year sovereign bonds for 5.75 percent in April and 10-year bonds for 6.75 percent.
Sri Lanka has raised more foreign loans this year to be able to manage ‘bunched up’ repayments in the next two years.
However Sri Lanka’s rupee has come under pressure as domestic credit picked up in March