CBSL unveils an indefinite term SLDB offer for expats and currency holders

Governor of the Central Bank Nivard Cabraal

  • The term varies from 3 months to 5 years with a fixed interest rate payable semi-annually
  • Minimum investment is $ 1,000
  • $ 1 billion in SLDB maturing by March 2022 and $ 400 million more thereafter; 88.9% held by national banks
  • SLDBs valued at $ 607 maturing in 2023 and an additional $ 206 million in 2024
  • Total SLDB stock at end of November at $ 2.3 billion

The Central Bank on Friday announced a one-of-a-kind open offering of Sri Lanka Development Bonds (SLDBs) maturing in the next five years, targeting Lankan expatriates and other currency holders.

The unique initiative is to increase foreign currency inflows and reserves and in response to the demands of Lankan expatriates during the multiple CBSL tours organized in the Middle East as well as others elsewhere.

The terms of SLDBs range from three months to five years and offer a fixed interest rate semi-annually (see table). The minimum investment is $ 1,000 and multiples of $ 1,000 from there.

CBSL sources said there had been demands for an open, multiple-choice opportunity and that investors would choose based on their attractiveness and risk threshold. The fixed rate for a remaining three-month SLDB maturity (as of December 23, 2021) is 5% while the five-year instrument offers 7%.

“This offer will not involve an increase in government borrowing,” CBSL officials said, adding that if the offer elicited a good response, CBSL would be able to reduce its holdings of treasury bills and government bonds.

The open-ended offer is aimed specifically at recipients of goods and services export products and other currency holders, including Sri Lankans working abroad. The investment window will not be facilitated during an ongoing SLDB auction, that is to say from the opening of the markets on the date of the start of the auction until the close of the markets on the date of settlement thereof.

The securities available for investment, the list of appointed agents and the payment of interest and the payment schedule at maturity can be accessed via ( /about/sldb_direct_window_offer_information_e.pdf).

In its short-term roadmap unveiled in October, CBSL announced its intention to expand and diversify SLDB’s investor base in order to attract foreign investment.

In October, the $ 1 billion SLDBs were due to mature within six months, ie until March 2022. Of this amount, 88.9% is held by national banks .

The CBSL said that the concentration of SLDB favors domestic banking sector investment and that a gradual increase in investor preference from the corporate sector has been observed in recent offers.

He also said that the Average Time to Maturity (ATM) of recent issues tipped towards shorter maturities and that investor preference appeared to be for fixed rate SLDBs.

In line with the measures announced in the short-term roadmap, the immediate objective was to attract government and private institutional investors for SLDBs from the Middle East, Asia and the rest of the world as well as eligible domestic investors and SLDBs also to be negotiated directly with investors before upcoming deadlines.

CBSL planned to raise an additional $ 300 million within six months (between October 2021 and March 2022) of which nearly 3 months have passed, however.

As of November 30, 2021, the stock of SLDBs is estimated at $ 2.3 billion. Those maturing in 2022 are worth $ 1.4 billion and $ 607 million in 2023 and $ 206 million by 2024.

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