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$
150 m syndicated loan success a confidence booster –CB
The
Central Bank said last week that the successful conclusion
of the US$ 150 million syndicated loan reflects the
confidence the international banking community has on
Sri Lanka.
“The successful raising of this loan through a
club arrangement which has been subscribed by as many
as nine international banking institutions serves as
a confirmation of the confidence that the international
banking community has in the Sri Lankan economy and
its the medium term prospects,” the Bank said.
In accordance with the annual borrowing programme approved
by Parliament under the Annual Appropriation Act for
year 2008, the Government successfully raised a syndicated
loan of USD 150 million through a ‘Club arrangement’
under which funds are provided by a consortium of major
international banks, functioning as exclusive club members.
The loan has a three-year maturity with a yearly put
option and cost of US$ 6 month LIBOR plus a margin of
250 basis points per annum. The current US$ 6 month
LIBOR rate is 3.13 per cent per annum.
On that basis, the total effective cost of the loan
would amount to 5.69 per cent per annum, inclusive of
the legal and bank charges.
The Mandate for the “Club arrangement” was
initially awarded to the Standard Chartered Bank (SCB)
on March 7, 2008 by the Government and since then, SCB
has been joined by 8 other banks, each as a Mandated
Lead Arranger. These banks are the BankMuscat S.A.O.G.;
Emirates Bank International PJSC; Indian Overseas Bank;
Indian Bank, Colombo Branch; Indian Bank, Singapore
Branch; Standard Chartered Bank; State Bank of India;
The Arab Investment Company S.A.A. and The Hong Kong
and Shanghai Banking Corporation Limited.
This loan also contains a Greenshoe Option through which
the Government of Sri Lanka could be asked to upsize
the transaction by a further US$ 100 million, up to
US$ 250 million, depending on the investor appetite.
Some international banks have already expressed their
interest to join the present group of lending banks
in upsizing transaction.
The proceeds of the loan are to be utilized by the Government
of Sri Lanka to fund infrastructure projects that have
been earmarked and approved by the Government and included
in the 2008 Budget.
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