Government back in Development Bond market to raise dollar debt
The Government is back in the debt market with the issuance of US dollar denominated Development Bonds (SLDBs) at high interest rates for investors soon as it desperately seeks more dollars, Finance Ministry sources confirmed.
The Central Bank has already announced the latest Development Bond issue notifying investors’, exporters of goods and services, expat workers and US dollar holders and these notices will be applicable till the auction of such securities. It has introduced various measures to encourage investments in SLDBs.
A wide publicity campaign is now being implemented to woo prospective investors and buyers of development bonds with a repayment period of 7 to 57 months, a top Treasury official said.
The expected amount to be raised by issuing these SLDB’s has not been stipulated as all those securities will be short term bonds with maturity periods of 7, 10, 13, 22, 25, 34, 46, 52 and 57 months, he added.
The interest rates range from 8.5 per cent to 8.95 per cent and the repayment will be made within a short period. “In collaboration with certain Sri Lankan overseas missions, the Central Bank has also made contact with eligible investors in those jurisdictions to further popularise investments in SLDBs,” he disclosed.
According to Central Bank sources, an issuance window for SLDBs will be opened with the announcement of the auction results until close of business of the business day prior to settlement at a first-come-first-served basis. But the date of issuance of these bonds and the expected minimum amount is yet to be announced.
As a result of the previous publicity campaign and the effectiveness of the measures introduced by the Central Bank, a sum of US$ 111.5 million has been raised through direct issuance of SLDBs from January 1 to February 15, 2022. The Central Bank raised $152.54 million via the issuance of six-month SLDBs on March 14 this year, a bank statement revealed. The SLDB auction was for $50 million at fixed rate with a possible upsizing by an additional three times based on favourable market response.
The 6-month tenor of SLDBs received bids worth $ 162.54 million of which $152.54 million was accepted at the Weighted Average Fixed Rate of 9.48 per cent. In the January auction five months tenor rate was 7.70 per cent.
The one year instrument received bids worth only $2.50 million and the rest of the tenor (One year 10 months, two years 10 months and four years nine months) didn’t receive any bids.
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