Sri Lanka raises US $ 653mn in SLDBs at slightly higher yields

• US $ 694mn SLDB maturities due on May 1

Sri Lanka raised record US $ 652.63 million in US dollar-denominated Sri Lanka Development Bonds (SLDB) at slightly higher yields in one of the largest single issuances that was concluded yesterday, in order to rollover US $ 693.89 million SLDB maturities falling on May 1.

In the auction held from April 22 to 28, the Public Debt Department (PDD) of the Central Bank offered up to US $ 750 million in nine months, one-year three months, two years, three years and three years nine months SLDBs under fixed rate arrangements to prospective investors. 

Although the auction was slightly undersubscribed with only 88 percent of SLDBs being subscribed, the CB was able to attract bids worth of US $ 660 million.

The PDD accepted a vast majority of the bids to raise US $ 652.63 million at a weighted average fixed rate spread of 6.99-7.95 percent, up from 6.05-6.89 percent spread accepted in the previous auction held in January. 

Accordingly, the PDD accepted bids worth of US $ 150 million in nine-month SLDBs at weighted average fixed rate of 7.4 percent, followed by US $ 151.97 million in one-year three months SLDBs at a rate of 7.59 percent, US $ 150.15 million in two-year SLDBs at 7.75 percent, US $ 200.03 million in three-year SLDBs at 7.95 percent and US $ 0.48 million in three years nine months SLDBs at 6.99 percent.

Notably, the PDD accepted all the bids received for two and four-year SLDBs. The three years nine months SLDBs saw a substantially lower demand with only US $ 0.53 million worth of bids.

The accepted interest rates were similar to the accepted coupon rates in the past three dollar-denominated International Sovereign Bond (ISB) auctions held outside of Sri Lanka, however, substantially below the current yields on the country’s outstanding ISBs traded in the secondary markets. 

The date of settlement of the SLDB issuance is set for May 3. 

In addition to maturing US $ 693.89 million SLDBs on May 1, there are several large SLDB maturities on June 30, July 30 and also in August.

According to Money and Capital Markets and State Enterprise Reforms State Minister Ajith Nivard Cabraal, the government is planning g to rollover most of the SLDB maturities occurring this year.
 (NF)