International markets are also very liquid, interest rates are low and risk appetite is rising, making for favourable market conditions, fund managers said.
Sri Lanka has a peg with the US dollar at 114.90 rupees for the US dollar, and any US monetary loosening can wash into the country in terms of capital inflows or higher demand for exports.
Update II Sri Lanka sold its first sovereign bond in 2007 for 8.25 percent.
"The strong response signifies the heightened confidence of investors globally in Sri Lanka and the country’s enhanced growth prospects following the end of the conflict," Central Bank Governor Nivard Cabraal said in a statement.
"This transaction broadens our international investor base substantially and enhances Sri Lanka’s financial flexibility for the future."
Sri Lanka emerged from a 30-year civil war in May and the economy is expected to grow by over 3.0 percent this year with an International Monetary Fund backed program to curb state deficit spending, which had also dogged the economy for decades.
The bond was rated B+ by Fitch and B by Standard and Poors.
The issue was oversubscribed more than 13 times, and was the highest oversubscription seen for a sovereign issue in 2009, the Central Bank said.
JP Morgan, HSBC and Royal Bank of Scotland were joint managers for the issue.
Sri Lanka's Central Bank, a unit of which issues debt on behalf of the government said 45 percent of the bonds were allocated to US investors, 31 percent to Europe and 24 percent to Asia.