- One, 2 and 3-year bonds open for subscription on October 19
- Offer can rise by another US $ 200mn depending on market response
- Minimum investment US $ 10,000; rates to be determined through bidding
The government is seeking US $ 100 million through a domestic dollar bond issue next week, with the provision to triple the offering if the investor demand proves favourable.
The issue will offer one, two and three-year maturities to eligible foreign currency holders, overseas investors and financial institutions.
According to the offer document dated October 12, the initial US $ 100 million issue carries scope for “upsizing by an additional two times”, based on the favourable market response, taking the potential fundraising to US $ 300 million.
The subscriptions open at 9:00 a.m. on October 19 and close at noon on October 23. The settlement is scheduled for October 30.
The auction will establish the government’s borrowing cost across the three maturities through competitive bidding. The interest rates will be fixed for the duration of the bonds, with the payments made every six months.
The investors must commit a minimum of US $ 10,000, with the larger subscriptions accepted in multiples of US $ 10,000.
The offer targets a broad pool of eligible dollar investors, including the Sri Lankans living overseas, foreign individuals and companies, overseas investment funds and holders of specified foreign currency accounts.
The non-resident Sri Lankans and foreign individuals can subscribe through Inward Investment Accounts, as can the companies and partnerships established overseas and foreign-based country funds, regional funds, mutual funds and unit trusts.
The holders of Personal Foreign Currency Accounts, Business Foreign Currency Accounts and accounts related to offshore banking business are also eligible.
The institutional participation extends to the licensed commercial banks appointed as authorised dealers by the Central Bank, together with the licensed specialised banks and finance companies permitted to accept foreign currency deposits.
The principal and interest will be paid in US dollars and will be fully repatriable, with Bank of Ceylon serving as the paying agent.
The first interest payment falls due on April 30, 2027. The principal repayments are scheduled for October 30 in 2027, 2028 and 2029 for the respective maturities.
The bonds represent direct, unconditional and unsecured government obligations, ranking equally with its other unsecured and unsubordinated debt.
The offer excludes the United States and US persons, with the document citing the US regulatory requirements and timeframe available for the issue. The applications originating from the US or carrying a US address will not be accepted, while the sales and transfers to the US persons are prohibited.
The investors must apply through the designated banks and primary dealers. The government retains discretion to accept or reject applications in full or in part, with successful applicants to be notified within two business days of the offer closing.
The transfers will be restricted to the eligible investors and require registration with the PDMO.
The issue is being undertaken under Public Debt Management Act No. 33 of 2024, with the Central Bank permission granted for the related foreign exchange transactions. The bonds are governed by the Sri Lankan law and subject to the applicable local taxes.
