Sri Lanka plans sovereign bond in February: CB Governor
COLOMBO (EconomyNext) – Sri Lanka is planning a sovereign bond sale in February after a revised budget for 2015 is presented by a new administration, Central Bank Governor Arjuna Mahendran said.
"As soon as the budget has been announced on the 29th (of January) we will start talking to markets," Mahendran said.
"I am hopeful that by February we will have a mandate to tap the markets for a new bond issue."
Sri Lanka was earlier planning to go the markets with a 1.5 billion US dollar bond ahead of a maturing 500 million US dollar bond on January 21.
The bond was paid with foreign reserves following elections in January which brought a new administration to office.
Among key investment banks who helped Sri Lanka manage bond issues earlier are Citibank, Standard Chartered and HSBC.
Mahendran said Sri Lanka hoped to reduce dependence on markets going forward, with higher revenue collections. Taxes are expected to be simplified in the January 29 budget.
He said interest rates in Western markets were low.
"There is no shortage of people out there who are willing to lend money to us," Mahendran said. "Of course we have to be judicious in our borrowings to see that we do not overpay the rates of interest that we pay."
He said Sri Lanka’s government will shrink the budget deficit over time, which will improve confidence of foreign lenders.
A recent reduction in fuel prices came from falling raw material prices and not from tax reductions, he said.