Sri Lanka's planned $1 billion, 10-year bond will likely yield 6.25 percent, tighter than initially expected, after the country received strong demand for its first global issue in a year, sources said on Monday.
Sri Lanka is the latest emerging sovereign to venture into bond markets as investors' risk appetite has returned.
Yield guidance tightened steadily over the course of the day to a 6.25-6.375 percent range after initial talk in the 6.5 percent area.
"I understand the final price should come in around 6.25 percent, the existing bonds are also doing very well," one fund manager in London said.
A source close to the deal told Reuters that pricing could be subject to change as books are still open in New York.
Sources also said the deal will be capped at $1 billion.
The success boosted the country's currency to 21-month highs on Monday while existing bonds surged, with Sri Lanka's portion of the JP Morgan EMBI Global index of sovereign emerging market bonds <11EML> tightening 15 basis points to 366 bps over U.S. Treasuries from 381 bps at the U.S. close and from 376 bps earlier in the day.
Earlier, sources said Sri Lanka had received bids of over $2.5 billion for the issue from European and Asian investors.
Sri Lanka plans to use the proceeds to fund the budget and to pay short-term debt.
This will be the island's third global debt issue since 2007, when it issued a maiden $500 million, five-year bond. The government sold a $500 million, five-year bond in 2009.
Bank of America Merrill Lynch <BAC.N>, HSBC Holdings Plc <HSBA.L> <0005.HK> and Royal Bank of Scotland Group Plc <RBS.L> are managing the sale.
Courtesy: Yahoo news