October 19, 2007	Friday	Shawwal 6, 1428

COLOMBO, Oct 18: Sri Lanka’s central bank said its maiden $500 million bond issue, rated as below investment grade, was oversubscribed three times despite soaring inflation in the war-torn nation.

Barclays Capital, HSBC and JP Morgan, the lead managers for the five-year issue, said the bond carried a coupon at 8.25 per cent and was sold across Asia, Europe, the Middle East and the United States.

Investors in the US subscribed to 40pc of the issue, with the balance split between Europe, Asia and the Middle East, the central bank said in a statement.

“The road show raised Sri Lanka’s profile with international investors and developed broad investor interest in the offering, resulting in an order book that was more than three times oversubscribed,” the central bank said.

The issue carries a “junk bond” or below investment grade rating of B-plus by Standard and Poor’s and BB-minus by Fitch Ratings.

The proceeds from the bonds will be used to build infrastructure projects such as power, roads and ports to boost the $26 billion economy that is under pressure from soaring inflation and intensified fighting.

Inflation in 2007 has averaged 17.3pc, public debt is at a hefty 93pc of gross domestic product and interest payments absorb almost a third of government revenues, Fitch recently noted.—AFP