Cabinet approval has already come through for the three to five year paper, which will be issued in small tranches.
"The pricing and other modalities have not been worked out yet. But we aim to tap our large migrant labour force to subscribe to the issue. It will be similar to what India has issued," P B Jayasundara said addressing participants at a seminar organised by the Sri Lanka Economists Association.
The Indian ocean island, has previously skipped the international capital markets and instead raised dollar denominated debt through local banks.
But this could change, once the country secures a sovereign rating later this year from three top rating agencies – Fitch Inc., Standard & Poor's and Moody's.
"We have no plans to use the rating and borrow money to finance the budget deficit. But we hope to reconstitute some our public debt portfolio and see whether any debt can be refinanced by relatively cheaper debt," he said.
As Sri Lanka moves up to join the list middle income countries and access to concessionary funds dry up, tapping the international bond markets seems a natural choice.
Analysts expect Sri Lanka to get a BB- rating, which is below investment grade.
A below investment rating has not deterred other countries from taping the international markets and Sri Lanka is expected to breeze through.
So far, Sri Lanka Telecom is the only corporate to raise US$ 100 million through a five-year rated international bond issue. The dominant fixedline operator was rated B+ by rating firms Fitch and Standard & Poor's last year.
Telecom bonds were the island's first offshore bonds and were priced at a spread of 300 basis points over the London interbank offered rate or LIBOR.
The government is also likely to structure a paper on similar terms.
Jayasundara refuses to be drawn in. Instead says that the sovereign rating will help the private sector finance future expansion plans through international bond issues.
-Mel Gunasekera: mel@vanguardlk.com