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SLDBs over subscribed by over 135 per cent
Tuesday, 23 June 2009 - 10:45 AM SL Time
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The Central Bank of Sri Lanka, on behalf of the Government, offered to issue Sri Lanka Development Bonds (SLDBs) to eligible investor categories for subscription at a rate of US Dollar 6 month LIBOR plus a margin to be determined through competitive bidding.
The offer was opened on 15th June 2009 with the settlement on 29th June 2009. The Bonds on offer amounted to US Dollar 50 million for a 2 year maturity period.
The offer was substantially oversubscribed by both foreign and local commercial banks, with the total bids received amounting to US Dollar 118 million (236% of the sum offered).
Of such bids, the Government has decided to accept US Dollar 115.8 million of 2 year SLDBs at the market determined rate of US Dollar 6 month LIBOR + 4.97 per cent (weighted average margin). Today, the US Dollar 6 month LIBOR rate is 1.16 per cent.
This SLDB issue is within the annual borrowing limit approved by Parliament for 2009 and a sum of US$ 50 mn mobilized through this bond issuance is to be used to settle the SLDBs that are maturing on that date. The excess fund mobilization of about US$ 66 mn through this SLDB issue would limit government requirement of new external foreign currency commercial borrowings during 2009.
Further, it would replenish the foreign currency reserves of the Central Bank, part of which was used to settle foreign currency commercial loan obligation of US $ 125 million on 15th June 2009.
The oversubscription and decline of the margin of this SLDB issue, compared to the last SLDB issuance in March this year and the increase in Foreign investments in rupee denominated Treasury bonds and Treasury bills by Rs 22 billion (US$ 190 million) during the past 10 weeks clearly reflects the growing investor confidence in the Government of Sri Lanka after the dawn of the new era in the country, as a result of the ending of the 30 year terrorist conflict.
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