"We don't plan to use it (sovereign rating) to finance the budget deficit, but to reconstitute some of our public debt, perhaps replacing some of the expensive currency debt with cheaper options," Finance Secretary P B Jayasundara told a news conference.
Sri Lanka has in the past has raised dollar bonds without a rating and observers were expecting a similar fund raising exercise to follow the country rating.
Past issues of dollar denominated development bonds were mainly bought by locally based financial institutions.
Jayasundara said Sri Lanka's per capita income of US$ 1,025 and investor interest in recent initial public offerings and a sole overseas debt issue, have raised the country’s profile among potential foreign investors.
"There was a lot of foreign interest in the last two IPO's (initial public offerings). Sri Lanka Telecom's international debt issue also raised our country's profile a lot," he said.
Sri Lanka Telecom is the only company so far to secure an international rating. Fitch Ratings International and Standard & Poor's rates SLT's foreign currency debt B+ and its local currency debt BB-, both junk ratings reflecting the high-yield, high-risk nature of the company's debt.
Sri Lanka's total debt as at end 2004 was Rs. 2.1 trillion or US$ 21.3 bn up from Rs. 1.9 trillion in 2003.
(US$ 1 = Rs. 100)
-LBO Newsdesk: lboemail@vanguardlk.com