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Sri Lanka Returns to Overseas Bond Markets After Terror Attacks

Investment Bank in Sri Lanka

(Bloomberg) — Sri Lanka is marketing dollar-denominated bonds in overseas markets for the second time since March as the South Asian nation recovers from the Easter Sunday terror attacks.

* The sovereign is offering five-year and long 10-year bonds with initial price talk in the area of 6.6% and 7.8%. That’s lower than the yields on similar maturity bonds the country priced in March, before a series of coordinated explosions in April at churches and luxury hotels killed more than 250 people.

* Sri Lanka borrowers are finding a window for issuance after the Federal Reserve last week opened the door for an interest- rate cut as early as July, and the European Central Bank said extra monetary stimulus might be needed.

*The government’s bond sale comes right after struggling carrier Sri Lankan Airlines Ltd. priced $175 million of five-year notes last week.

“The government is capitalizing on increased investor risk appetite subsequent to recent dovish comments by the Fed and ECB, and the successful placement last week of the Sri Lankan Airlines government-guaranteed bond, which was massively oversubscribed,” said Todd Schubert, head of fixed-income research at Bank of Singapore Ltd.

“Returning to the overseas bond markets will allow Sri Lanka to increase foreign-currency reserves and prop up the economy after the suicide bombings affected tourism and consumer demand, said Dimantha Mathew, head of research at First Capital Holdings PLC in Colombo.”