• Letters

The Government last week indicated that the proposed US$ 500 million Sovereign Bond was well within the mammoth US$ 6 billion or Rs. 655 billion approved by Parliament for 2007.

“The gross borrowing limit of the Government as approved by Parliament for the year 2007 is Rs.655 billion (approximately US$ 6 billion). and the proposed international bond issue would be well within such overall annual borrowing limit,” the Finance Ministry said in its statement to local media only.

“Further, the Foreign Loans Act empowers the President of the country to approve any foreign borrowing and those conditions also have been diligently adhered to. Sri Lanka has a proud record of honoring its international debt obligations since independence in 1948 and the Government fully intends to maintain this record,” it added.
The Statement by the Finance Ministry also confirmed that the Government is hoping to raise funds by way of a bond offering in the international capital markets, for which Barclays Capital, HSBC and JPMorgan have been appointed as joint lead managers and bookrunners.
The Bank of Ceylon will act as a co-manager to this issue under the joint lead managers. These joint lead managers were selected by the Monetary Board of the Central Bank of Sri Lanka (the “CBSL”), on behalf of the Government, after a wide range of proposals from leading international and local financial institutions were evaluated by a technical committee comprising senior officials of the CBSL and the Ministry of Finance.

The Government intends to use the proceeds of the bond offering to supplement available concessionary funds to develop infrastructure projects that have previously been approved by the Government and included in the 2007 Budget. The Government is of the view that these projects are essential for encouraging both domestic and foreign investment in the economy to achieve a higher and sustainable growth in the longer-term, create more employment, raise income levels and alleviate poverty. Further, this bond issue is expected to establish a reference point or a benchmark for the private sector in Sri Lanka to access international capital markets as well. Many sovereign nations have accessed the international capital markets over recent years, as a means of diversifying their funding sources, as well as raising the profile of their economies with international investors. From Asia, this includes sovereigns such as Indonesia, Philippines, Thailand, Vietnam and Pakistan.

In compliance with the requirements over a pending Bond issue, the Finance Ministry said this statement was not an offer of securities for sale in the United States or elsewhere. No securities of the Democratic Socialist Republic of Sri Lanka are being registered under the U.S.Securities Act of 1933, as amended (the “Securities Act”) and no such securities may be offered or sold in the United States unless registered under the Securities Act or pursuant to an exemption from such registration. No public offering of securities is being made in the United States.