Sri Lanka plans sovereign bond in early 2018

ECONOMYNEXT – Sri Lanka would like to go to international market with a sovereign bond in early 2018 before the US Federal Reserve does more rake hikes, Central Bank Governor Indrajit Coomaraswamy said.

Coomaraswamy said the exact date of the bond sale will depend on market conditions but he felt that going to the market on May or June was too late.

He said the US Fed was expected to make three 25 basis point hikes next year, and it was best t go to market as early as possible.

US tax cuts and planned infrastructure spending boom may also push the Fed to tighten faster, amid stronger economic growth in the US, Coomaraswamy said.

Coomaraswamy declined to reveal a size of the bond sale, but the minimum sovereign size is 500 million dollars. Sri Lanka has raised volumes ranging from a billion to 1.5 billion US dollars in the past.

Sri Lanka’s last sovereign bond sold at 620 basis points above the US Treasuries yield was now trading at a narrower 550 basis point risk premium showing increased investor confidence, Coomaraswamy said.

Fitch and Standard and Poor’s have also lifted a negative outlook on Sri Lanka’s rating, he said.

With slowing domestic credit and the central bank ending money printing, Sri Lanka is now collecting forex reserves.

On a net basis Sri Lanka has withdrawn cash from markets (sterilized forex purchases) in 2017, Coomaraswamy said.  (Colombo/Dec29/2017)





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