The money would be 3-year tenor but lenders will have the option to pull out after a year through a put option and priced at 259 basis points above the London Interbank Offered Rate (LIBOR).
In addition Deutsche Bank was mandated to raise US dollar 50 million on a five year maturity at a rate of LIBOR plus 370 basis points a year, the country's Central Bank which runs the debt office said.
LIBOR is now at around 3.01 percent.
"In that context, the rates at which the loans are raised are considered attractive, in comparison with the higher credit spreads that are prevailing in the current international debt market for similar maturities," the Central Bank said in a statement.
Authorities said the money would be used for infrastructure, but the government needs to go beyond domestic markets to bridge its budget deficit with interest rates already topping 18 percent.
The government oringally invited proposals from 14 international and two local banks. Standard Chartered Bank, HSBC, Deutsche Bank, Morgan Stanley and Citibank had bid for the deal.
Sri Lanka was originally looking for 3 to 5-year money in a bid to extend the tenure of its foreign borrowings but increasingly spooky investors have been unwilling to lend beyond one year partly due to the current international bond market turmoil.
But Standard & Poors' also downgraded the outlook on the island's B+ sovereign rating shortly before proposals for a syndicated loan was called.
Last year Sri Lanka raised 500 million dollars for five years at 8.25 percent.
The 50 million dollar 5-year deal is priced at 8.70 percent floating, making it attractive for the government when compared the original bond is now traded at a discount of over 10 percent analysts said.
The 3-year tenor money with an annual put option compares with 2 and 3-year money raised in the last two years which were priced at 150 to 200 basis points above LIBOR.