Sri Lanka to raise US $ 500mn via bonds, divesting state hotels amid debt

9 January 2018 12:00 am - 0     - {{hitsCtrl.values.hits}}

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REUTERS: Sri Lanka aims to raise US $ 500 million this month via development bonds and is in the process of divesting two state-owned hotels, the Central Bank and a ministry said yesterday, as the government faces unprecedented debt repayment this year.


President Maithripala Sirisena’s administration must repay an estimated Rs.1.97 trillion in 2018 - a record high - including US $ 2.9 billion of foreign loans, and a total of US $ 5.36 billion of interest.


The Central Bank announced plans to raise US $ 500 million in two-year, three-year, four-year and five-year Sri Lanka Development Bonds (SLDB) out of planned US $ 3 billion for this year at both fixed and floating rate arrangement, the Central Bank said in a posting on its website.


The cabinet last week approved plans to borrow some US $ 5 billion in 2018, including US $ 2 billion of sovereign bond sales and US $ 3 billion of development bonds to refinance big debts that fall due this year.


A total of about US $ 2.5 billion worth of SLDBs mature this year.


The government has also called for a request for proposal (RFP) to find investors for Rs.45 billion worth of Grand Hyatt Colombo property that includes a 458-room, five-star hotel and 100 apartments.


The government has offered 100 percent shares in Grand Hyatt Colombo property and said an investor would be selected through a competitive process, the Public Enterprise Development Ministry said in a posting on its website.


The government has entered into a 20-year management contract with the Hyatt group to run the hotel, which is due to be completed and to begin operations this year.


The government also said it was seeking investors for a 51 percent controlling stake in a 350-room five-star hotel in the heart of the capital, Colombo, which Hilton International runs under a management contract.


The ministry said Hilton International had indicated its desire to renew the contract after the current one ends in 2019.

The divestment of state-owned hotels comes as the repayment of expensive infrastructure foreign loans starts this year, which has left the island nation facing a debt crisis.

Central Bank Governor Indrajit Coomaraswamy said last week the government should go for the sovereign bond as early as possible as there was ample money in global capital markets ahead of expected rate increases by the US Federal Reserve.


The government is trying to pass a Liability Management Act that would allow it to borrow more than budget limit as it tries to manage a debt repayment over the next two years. It also plans to reschedule some loans.


The US $ 81 billion economy expected foreign currency outflows of US $ 5.6 billion in the next 12 months including loans, securities and deposits, compared with a current US $ 8 billion in foreign exchange reserves, according to Central Bank data. 

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