Last month government raised US$ 100 million through a syndicated loan.
"Government has to go global. We are planning this year to float the bond to ensure country is not speaking a small economy but talking in a global environment," says Jayasundera.
Government has never issued dollar debt internationally.
But last month Citibank raised US$ 100 million through a syndicated loan for the government. It closely followed an international issue by Sri Lanka Telecom (SLT).
Treasury Secretary’s optimism however, was not shared by corporate treasurers, who have a feel of how dollar bonds issued by Sri Lanka will be received internationally.
Yet the Treasury seems also, to have abandoned earlier plans to sell bonds to Sri Lankans living and working abroad.
"That is to get the Sri Lankans invest in fully secure, risk free instruments with competitive interest rates," he says.
A bank treasure said it was unlikely that banks will encourage their dollar depositors in RFC and NRFC accounts to channel those deposits to government bonds.
Offshore banking units depend on dollar deposits to lend to BOI companies.
In the past banks have also channeled some of this money to dollar debt raised in the local market.
Treasury Secretary says the close to US$ 500 million BOP surplus last year and two international credit ratings might be enough to convince lenders abroad.
But international rating agencies Fitch and S&P, warned that renewed fighting could result in a downgrade.
S&P that gave a B+, a junk grade rating, said that delays in fiscal adjustment, reforms in the public sector, or deterioration in the security situation could lead to a further down grade.
Fitch Ratings that gave a BB- rating, a notch higher than the one by S&P, was even harsher.
It said: "a fresh outbreak of war will be very damaging for the rating because public finances are weak and it risks losing the confidence of donors."
So far Sri Lanka’s dollar debt, roughly equal to half its GDP, is at highly concessional terms.
Hostilities have intensified since December.
Some 140 people, including 82 security forces personnel have been killed since then despite the Norway brokered ceasefire holding.
A Norwegian government envoy expected here has already played down expectations of a major breakthrough.
Issuing a bond internationally under these macro and security considerations will be difficult according to a banker.
He said the most the government could do is perhaps go for another small syndicated loan or a 'development bond' issued to local banks.
Unless hostilities cool down, there is little chance of raising 500 to a billion dollars according to him.
-LBR Newsdesk: LBOEmail@vanguardlk.com