COLOMBO - Sri Lanka's new government raised nearly a billion dollars through its first overseas bond issue after parliament shot down plans to increase local borrowings, the country's central bank said Friday.
The Central Bank of Sri Lanka said US$650 million (S$878 million) was raised Thursday through a 10-year bond at an annual interest rate of 6.125 per cent while the rest was through shorter tenure.
"A total of $988 million was raised via international sovereign bonds and Sri Lanka Development Bonds at a weighted average cost of 5.261 per cent per annum," the bank said in a statement.
Sri Lanka's previous 10-year dollar bond was in July 2012 when the then government raised a billion dollars at a 5.875 per cent annual interest.
The new administration launched its first dollar bond issue a month after the national parliament rejected a plan to raise the domestic borrowing limit by over $3.0 billion.
Prime Minister Ranil Wickremesinghe's minority government had asked the 225-member legislature to approve increasing the treasury bond limit by 400 billion rupees (S$4.05 billion) to 1,250 billion rupees, but it was rejected in April.
The government has increased welfare spending and reduced the price of fuel and utilities in line with election promises ahead of the January 8 vote. Despite a marginal improvement in tax collection, the government is hard pressed for cash to meet new spending commitments.
International ratings agency, Fitch, has assigned a "speculative" rating of BB for Sri Lanka's latest bond issue. However, Sri Lanka has had a track record of not defaulting on its foreign debt.