Sri Lanka to raise US$100 mn from syndicated loan

December 14, 2006 (LBO) - Sri Lanka Thursday signed up for a 100 million dollar syndicated from Citigroup to help pay for budgetary and balance of payment support, a top official said. Fitch gave Sri Lanka a BB-minus rating while Standard and Poor's awarded it an even lower B+ sovereign rating. "We (the government) signed the papers for the syndicated loan this evening. The lenders are due to sign them tomorrow (Friday) and the funds are expected latest next Tuesday," Central Bank Governor, Nivard Cabraal told LBO.

He said the three-year issue is priced at 75 basis points above the six months LIBOR.

Last December, Citigroup raised 100 million dollars for the government through a three-year syndicated loan priced at 95 basis points above the six months London interbank offered rate or LIBOR, though total issue costs may have been 125 basis points above LIBOR.

The government is also looking at issuing a 500 million dollar bond next year, by raising funds in the international market.

International rating agencies last December, assigned a speculative or junk bond rating to Sri Lanka, as the island's battle with Tamil Tiger rebels since 1972, is putting a strain on government finances.