Sri Lanka may sell US$1.5bn in sovereign bond in March

ECONOMYNEXT – Sri Lanka may go to market with a sovereign bond to raise up to $1.5 billion as early as next month, with the US Federal Reserve poised to raise rates again.

This week, Sri Lanka’s cabinet of ministers approved the proposal by the finance ministry to sell the bond.

Sri Lanka is also negotiating a syndicated loan of up to $1.0 billion.

Sri Lanka is expected to tap Citibank, Standard Chartered Bank, HSBC and Deutsche Bank to help arrange road shows to update investors, in preparation for a bond sale, sources said.

Federal Reserve Chair Janet Yellen made a strong case to raise rates sooner than later.

Fitch Ratings upgraded the outlook on Sri Lanka ‘B+’ sovereign rating to ‘stable’ from ‘negative’ this week on improving tax revenues, which helped reduce the budget deficit that went off the rails in 2015 after a state salary hike and increases in subsidies.

But rising oil prices are hurting the finances of state energy utilities, forcing them to borrow more.

In addition to budget deficits, energy subsidies triggered by the lack of price formulae are the two triggers for Sri Lanka’s economic crises in the past. (Colombo/Feb15/2017 – Corrected Sri Lanka is negotiationg a syndicated loan of up to a billion US dollars)

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