Good timing
Timing is everything. In July, the Democratic Socialist Republic of Sri Lanka raised $1.5bn — on total orders of $5.5bn — via dual-tranche 5.5 year and 10 year bonds, at 5.75% and 6.825% respectively. That chunky print boosted the confidence of international investors in the South Asian sovereign, having been completed just 10 days after the appointment of veteran policymaker Indrajith Coomaraswamy as Sri Lanka’s new central bank governor.
Bankers saw it as a canny piece of work by a government desperate to tackle its fiscal problems.
It had recently received some heartening news by securing a three year $1.5bn loan from the International Monetary Fund. The bond sale in turn was launched into a market that had just stabilised after a volatile few weeks in the wake of Britain’s vote to leave the European Union. It also came at a time when the US Federal Reserve, following the issue of weak jobs data, was mulling whether or not to delay plans to hike interest rates for the second time this year.
In the last week of August, the government returned to the international loan markets after an absence of eight years. It launched a $500m syndicated facility — later increased to $700m due to strong demand — attracting a mix of lenders from the Middle East and South Asia, with banks from India and Pakistan taking $180m of the total.