SL mulls diversifying int’l bond issuances | Sunday Observer

SL mulls diversifying int’l bond issuances

26 August, 2018

The government is planning to ascertain the capability of using Japanese Yen, Chinese Renminbi and Euro to access international markets in anticipation of managing the budget financing at a low cost, diversifying exports and attracting Foreign Direct Investments, The Sunday Observer learns.

Although since 2017, Sri Lanka has been issuing international Sovereign Bonds in US Dollars, the Cabinet of Ministers last week decided to appoint an Officials’ Committee to study and provide recommendations on the possibility of issuing bonds in the three alternative currencies in future. The decision was based on a proposal made by Minister of Finance and Mass Media, Mangala Samaraweera.

“Our borrowing so far has been limited to US Dollars. So the idea behind this proposal is to look at the possibilities to diversify our currency exposure in preparation of fulfilling the future budget financing requirements,” Secretary to the Treasury and the Ministry of Finance, Dr. R. H. S. Samaratunga told The Sunday Observer yesterday.

According to him, the three-member Officials Committee will be headed by the Director General of the External Resources Department at the Ministry of National Policies and Economic Affairs and comprise the Director of Economic Research Department of the Central Bank of Sri Lanka and the Superintendent and Registrar of Public Debt Department of the Central Bank. It is learnt that the officials have been provided two weeks to submit the report.

Early this month, governor of the Central Bank of Sri Lanka, Dr. Indrajit Coomaraswamy disclosed plans of working towards a US$ 250 million ‘Panda bond’ issuance before the end of the year. Panda bond is a Chinese renminbi-denominated bond from a non-Chinese issuer, sold in the People’s Republic of China.

“We went on a road show to China and there seems to be good interest. We met some banks, insurance companies and other institutional investors and perhaps most encouraging of all were our meeting with the People’s Bank of China,” he said.

He disclosed that the Deputy Governor of the People’s Bank of China had at the time given unsolicited suggestion to set up a joint task force to examine how Sri Lanka could explore the Panda bond market.

In March 2018, the Philippines issued its inaugural renminbi-denominated bonds or Panda bonds becoming the first Association of Southeast Asian Nations (ASEAN) member to issue Panda bonds.