On March 7th, 2019, the Central Bank of Sri Lanka (CBSL), on behalf of the Democratic Socialist Republic of Sri Lanka (Sri Lanka), returned to the USD bond markets, successfully pricing a new issuance of USD 1.0 billion 5-year and USD 1.4 billion 10-year Senior Unsecured Fixed Rate Bonds (the Bonds) with maturity dates of March 14th, 2024 and March 14th, 2029, respectively.
The Bonds have been rated ‘B2’, ‘B’ and ‘B’ by Moody’s Investors Service, Standard and Poor’s and Fitch Ratings respectively.
This marks Sri Lanka’s thirteenth USD benchmark offering in the international bond markets since 2007, reflecting the international investor community’s continued support for Sri Lanka through the years. BOC International, Citigroup, Deutsche Bank, HSBC, J.P. Morgan, SMBC Nikko and Standard Chartered Bank acted as the Joint Lead Managers and Bookrunners on the successful transaction.
Capitalizing on the strong market backdrop, and leveraging on the positive momentum generated by the recent IMF staff-level agreement on the fifth review of Sri Lanka’s Extended Fund Facility, Sri Lanka announced the transaction during the Asia morning of March 7th, 2019. The joint syndicates released terms and initial price guidance for new 5-year and 10-year tranches at 7.20% area and 8.20% area respectively.
The transaction saw strong interest from a wide range of high quality investors, which allowed Sri Lanka to tighten final price guidance to 6.90% (+/- 5bps) on the 5-year tranche, and 7.90% (+/- 5 bps) on the 10-year tranche. The Bonds eventually priced at the tighter end of the range during New York hours, with a yield of 6.85% and 7.85% for the new 5-year and 10-year tranches, respectively, representing price tightening of 35 bps from initial guidance, for both tranches.
The final orderbook stood at over USD 2.7 billion across 190 accounts for the 5-year tranche and over USD 4.8 billion across 252 accounts for the 10-year tranche – clearly reflecting global investors’ continued confidence and positive outlook on Sri Lanka’s economic growth story.
The orderbook was well diversified across both tranches. The 5-year tranche saw allocations of 39% to the U.S., 38% to Europe, and the remaining 23% to Asia. By investor type, the split was 91% to fund managers, 5% to insurance and pension funds, 3% to banks, and 1% to other investors. The 10-year tranche saw allocations of 44% to the U.S., 39% to Europe, and the remaining 17% to Asia. By investor type, the split was 90% to fund managers, 5% to insurance and pension funds, 4% to banks, and 1% to other investors.
In a first for Sri Lanka, the Bonds are also expected to be listed on the London Stock Exchange (LSE), to be admitted to the LSE’s International Securities Market (ISM), in addition to the listing on the Singapore Exchange Securities Trading Limited (the SGXST), for the listing and quotation of the Bonds on the SGXST.
This press release is not an offer of securities for sale in the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws of the United States, and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and applicable state securities laws of the United States.
Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer and that will contain detailed information about the issuer. Nothing in this press release shall constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction in which such offer or sale would be unlawful. A rating is not a recommendation to buy, sell or hold the securities and may be subject to suspension, reduction or withdrawal at any time by the rating agency.
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