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| Sunday, 16 October 2005 |
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Central Bank to issue SLDBs worth $ 100 million by Surekha Galagoda The Government has decided to go for more borrowing from the international capital market through the Sri Lanka Development Bond (SLDB). Central Bank officials said that five reputed international banks have offered to purchase SLDBs and at present their offers are being evaluated by a technical evaluation committee. The Final evaluation of the offers will be done in consultation with the Finance Ministry. Initially we will issue SLDBs worth US$ 100 million, officials said. SLDBs are debt instruments denominated in US Dollars issued by the Government of Sri Lanka in terms of the Foreign Loans Act No. 29 of 1957. Repayment is guaranteed by the Government of Sri Lanka. Those eligible to purchase SLDBs are authorised dealers appointed in terms of Section 4 of the Exchange Control Act No. 24 of 1953, Primary Dealers appointed by the Monetary Board under the Registered Stock and Securities Ordinance No. 7 of 1937 and the Local Treasury Bills Ordinance No. 8 of 1923. Citizens of foreign states whether resident in Sri Lanka or outside Sri Lanka and citizens of Sri Lanka who have made their permanent abode outside Sri Lanka and citizens of Sri Lanka who have gone abroad to take up employment or to set up in business or in a profession are also eligible to purchase SLDBs. In addition bodies corporate or unincorporate established under the laws of a country other than Sri Lanka are eligible to purchase SLDBs. Companies which have entered into agreements in terms of Section 17 of the Board of Investment of Sri Lanka Law No. 4 of 1978 are eligible but with full exemption from the provisions of the Exchange Control Act provided that all purchases of SLDBs are made against debits to foreign currency accounts maintained only for the purpose of crediting earnings from exports of such companies. However, the SLDBs are not sold in the USA or to those resident in the USA. The minimum tenure of the SLDBs is two years and are denominated in US Dollars. The minimum investment at the auction should be US Dollars 100,000. Higher denominations are available in multiples of US Dollars 5,000. In the secondary market the minimum investment will be US Dollars 5,000. Interest payments and principal repayment are done twice a year. Calculation of interest payments will be based on the London Inter Bank Offered Rate (LIBOR) per annum plus a margin through competitive bidding in both years. Principal repayment is at the end of the maturity period from the date of issue. Principal and interest on SLDBs are fully repatriable. The Hongkong and Shanghai Banking Corporation Ltd.,Colombo, is the Paying Agent appointed by the Superintendent of Public Debt (SPD) to make payment of interest and repayment principal to the holders of SLDBs. The SLDBs are transferable by endorsement, delivery and registration on an application made to the SPD. |
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