SRI LANKA’S DEBUT INTERNATIONAL
BOND ISSUE OVERSUBSCRIBED OVER THREE TIMES
Central Bank Governor Mr. Ajith Nivard
Cabraal speaks of the positive impact on the economy of the oversubscribed
Picture shows from left to right - Mr. K.G.D.D Dheerasinghe,
Alternative Executive Director IMF,
Mr. Ajith Nivard Cabraal, Governor Central Bank, Mr. W.A. Wijewardena,
Deputy Governor Central Bank and
Dr. P.N. Weerasinghe, Director Economic Research Department, Central
Following a triumphant international road show
of meeting with international investors in Singapore, Hong Kong,
London, New York, Boston and Los Angeles, which assured $500 million
from the international bond market, the Governor of the Sri Lanka
Central Bank, Mr. Ajith Nivard Cabraal, is currently in Washington
DC, to attend the Annual sessions of the World Bank and the IMF.
In an exclusive interview at the Sri Lanka Embassy
in Washington DC, Mr. Cabraal said that the response of the international
investor community to Sri Lanka’s economic story was overwhelming.
"In fact, the international investors were prepared to commit
investments over $1.6 billion," he said, and highlighted
that Sri Lanka’s debut international bond was oversubscribed
3.2 times. Mr. Cabraal said, "It can be termed a huge success."
Sri Lanka accepted $500 million of the offered $1.6 billion. During
the course of the road show, Mr. Cabraal and his team had met
nearly 50 international investors on one-on-one meetings and at
least 30 investors each during four luncheon meetings.
A meeting organized on Friday by the CitiGroup
in Washington DC facilitated Mr. Cabraal to brief a group of investors
on the state of Sri Lanka’s economy and the investment opportunities
The bond issue was jointly led by JP Morgan,
Hong Kong and Shanghai Banking Corporation and Barclays Capital,
on behalf of the Sri Lanka government.
During the initial two days of the breaking news,
the impact of this success story on Sri Lanka’s economy
has been sensational, marked specially by a significant reduction
in interest rates in the Treasury Bill and Treasury Bond market
and a discernible appreciation of the Sri Lanka rupee against
the US dollar. The Treasury Bill interest rate has come down by
22 basis points and the exchange rate has appreciated by about
60 cents during the past two days. The stock market went up by
nearly 1% yesterday. The treasury bill interest savings the government
has got has already exceeded the first entirety of the interest
payment to be made on the bond issue. Economic analysts in Colombo
said, “It is likely that there will be a very favorable
impact on the cost of living and economic activity in general.”
The confidence of the international investors has also buoyed
up the Sri Lanka stock exchange and indices appreciated by nearly
1% in a very brisk day of trading. The mood appears to be one
of perceptible international confidence in the resilience of the
Sri Lanka economy and a significant commitment toward the massive
infrastructure projects in the country.
Mr. Cabraal says that the government’s
focus is toward greater expansion of the economy and he predicts
that Sri Lanka will be able to achieve a growth target of 7.5%
for 2008 and very effectively control the fiscal deficit.
Mr. Cabraal said that the oversubscription of
Sri Lanka’s debut bond issue clearly indicates the confidence
that experienced international investors have in Sri Lanka and
their belief in the country’s ability to spur economic growth
to great heights and to maintain the momentum to achieving even
greater progress, while maintaining macro economic fundamentals
at satisfactory levels.
Associated with Mr. Nivard Cabraal at these meetings
were Mr. K.G.D.D Dheerasinghe, Alternative Executive Director
IMF, Mr. W.A. Wijewardena, Deputy Governor Central Bank and Dr.
P.N. Weerasinghe, Director Economic Research Department, Central
Embassy of Sri Lanka
19 October 2007