REUTERS: Sri Lanka is waiting for the right time to launch a sovereign bond of up to US $1.5 billion, possibly with a longer tenure to roll over its debts in 2015, Central Bank Governor Arjuna Mahendran said.
The island nation’s last sovereign bond of US $500 million was priced at a yield of 5.125 percent in April 2014.“Now that inflation is coming down, I see no reason why we won’t get a better rate of interest,” Mahendran told Reuters.Sri Lanka’s inflation hit a record low of 0.6 percent in January, slowing from 3.2 percent the previous month after the new government reduced fuel prices.Speculation over an interest rate hike by the U.S. Federal Reserve and Greece possibly exiting the euro zone have been weighing on emerging markets’ bond pricing at the moment, Mahendran said.
“So we want to wait for an opportune moment. When that volatility decreases then we will be able to get the best possible rate for our borrowing,” he said.
“I will definitely go for a longer tenure, may be even a 20-year or 30-year is something to look for. We don’t want to increase the interest rate burden of the country.”
The bond will be used to roll over some expensive debts that have to be repaid this year, he said.Mahendran said the lead managers for the bond issue have been picked, but declined to name them.The Central Bank repaid a US $500 million sovereign bond from its reserves soon after the January 8 presidential polls as the US $ 76 billion economy was unable t o raise money through sovereign bonds due to the election.