Central Bank says US$500 bond sale on

The Central Bank says the controversial US$ 500 million international bond issue is still on despite reports that the international markets are not condusive for marketing such a product. But it will be borrowing at a higher cost.

“We are on target, but the countries who decide to take up the bonds will factor the country risk into their pricing and as a result the premiums we have to pay will be high,” a senior Central Bank official told The Sunday Times FT.

He said that Sri Lanka is rated under the ‘below investment grade’ as a BB(-) country by rating agencies such as Fitch Rating. “For such countries the rates are calculated as LIBOR plus 150 to 170 basis points. This is junk bond situation, where the country risk is high,” he explained.

Philippines, Vietnam, Pakistan and Fiji Islands are some of the other countries rated under the BB(-) category. The Central Bank official said that Treasury and Central Bank officials will travel to Singapore, Dubai, Germany, New York and Hong Kong to meet prospective investors after the international procurement procedures have been completed and the technical evaluation proposals are submitted.