Sri Lanka launched the sale of U.S. dollar-denominated bonds on Thursday and orders topped $3 billion, according to a term sheet seen by Reuters.
It was not immediately clear how much Sri Lanka will raise from the bond sale, which will be priced during U.S. Thursday work hours.
Sri Lanka also shaved 30 basis points off the initial indicative coupons - offering to 6.90 percent on the five-year bonds and 7.90 percent on the 10-year bonds, according to a later term sheet.
Standard & Poor's and Fitch said they had assigned “B” ratings to the bonds, while Moody's rated them “B2”.
Last month, Sri Lanka raised its borrowing limit for dollar-denominated bonds to $3 billion, three sources said.
The sale of five-year and 10-year bonds comes as the South Asian island nation is struggling to repay foreign loans, with a record $5.9 billion due this year, including $2.6 billion in the first quarter.
Sri Lanka used its reserves to repay a $1 billion sovereign bond loan in January and the International Monetary Fund (IMF) last week agreed to extend a $1.5 billion loan facility for an extra year.
The bond sale was launched two days after the government presented its budget for 2019 and not long after the end of a 51-day political crisis that caused a sharp fall for the rupee currency.
The proposed budget boosted spending on state employees, pensioners and the armed forces, and promised many rural infrastructure projects to woo voters before two elections.
Proceeds from the bond sale will be used “for expenditure sanctioned by the Parliament of Sri Lanka for 2019”, the term sheet said.
All three major rating agencies downgraded Sri Lanka's debt after President Maithripala Sirisena sacked his prime minister in October and replaced him with pro-China former president Mahinda Rajapaksa, though that decision was later reversed.
Sri Lanka's five-year government bond yields were at 10.85 percent on Thursday, below an 18-month high of 12.30 percent during the political crisis.
BOC International, Citigroup, Deutsche Bank, HSBC, JPMorgan, SMBC Nikko and Standard Chartered Bank are joint book runners for the bond sale.