US investors buy 30-pct of Sri Lanka US$2bn sovereign bonds, Europe 60-pct

ECONOMYNEXT- A 2.0 billion US dollar international sovereign bond received 6.2 billion dollars in orders, with fund managers from the US buying 60 percent of the issued, the central bank said.

Sri Lanka sold 500 million US dollars in 5-year bonds and 1.5 billion US dollars in 10-year bonds on June 24, in the second such issuance this year.

The central bank, which issued bonds for the Treasury said that the 5-year bonds received 1.8 billion US dollars of orders while the 10-year bonds received 4.4 billion dollars.

It said that 30 percent of the orders for the 5-year bonds came from the US, 50 percent from Europe, Middle East and Africa (EMEA) and 20 percent from Asia.

Investors in the 5-year bond were 80 percent fund managers, 9 percent insurance, pension funds and corporates, 8 percent bank treasuries and 2 percent to private banks and other investors.

For the 10-year bond, 44 percent of the subscriptions came from the US, 40 percent from Middle East and 16 percent from Asia.

For the 10 -year bond 87 percent of investors bond were fund managers, 6 percent insurance, pension funds and corporates, 5 percent bank treasuries and 2 percent private banks and other investors.

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The 5-year bond was sold at 6.35 percent, down from an initial guidance of 6.60 percent and a final price guidance of 6.40 percent, the central bank said.

The 10-year bond was sold at 7.55 percent, down from an initial price guidance of 7.80 percent and a final price guidance of 7.60 percent.

Sri Lanka had timed the bonds after US Treasuries yields eased and the Fed has indicated a rate cut ahead, getting a lower absolute rate than a March bond sale.

However, the yield spread with US Treasuries widened between Sri Lanka’s March and June bond sales.

A 5-year bond was sold about 441 basis points above similar tenor US Treasuries in March, while a 10-year bond was sold 521 basis points higher.

At June issue, the spread was about 460 basis points for the 5-year bond and 553 basis points for a 10-year bond based on published US Treasury yields. (Colombo/Jun25/2019)