Sri Lanka sold 460 million dollars worth rupee bonds to foreign investors in the first half of 2007.
By September 2007 Sri Lanka had issued 1,002 billion rupees (9.1 billion dollars) of Treasury bonds.
Treasury Secretary P B Jayasundera said Friday that the government was also planning a dollar denominated sovereign bond with a tenor of 7 to 10 years. In October a 500 million dollar sovereign bond was floated for 8.
25 percent.
The rupee bonds were sold at around 14.50 percent but a 5-year bond popular among foreigners is now traded around 17.
50 percent.
The Central Bank which runs the debt office of the government said the move to lift the foreign investor limit was a further relaxation of capital account transactions.
Plans to raise more money abroad come amidst warnings from the International Monetary Fund that Sri Lanka could be heading for 'public debt distress' an euphemism for sovereign default.
Foreign country funds, mutual funds or regional funds approved by the Securities and Exchange Commission (SEC) of Sri Lanka, companies incorporated outside Sri Lanka and foreign citizens could buy the bonds.
"This measure will enhance the development of the capital market by broadening the investor base and increasing the competition in the bond market," the Central Bank said.
The bonds are sold by commercial banks and primary dealers of government securities.
Foreign investors have to open Treasury Bond Investment External Rupee Accounts (TIERA) in commercial banks to purchase the bonds.