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No rush for sovereign bond

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Sri Lanka was in no rush to float an international sovereign bond, as domestic borrowing rates are now low, Central Bank Governor Arjuna Mahendran said.
“I don’t want to jump into the bond right now because if you really look at dollar borrowing rates, even if the rupee depreciates, it means that we are paying more rupees to service our foreign debt,” Mahendran said in an interview.

“Even if you re borrowing at 5 and three quarter (5.75 percent) that you have to add on may be 3 to 5 percent a year of depreciation of currency on average.”
“So the effective rate is much more than 10 percent on our foreign borrowings.”

The government’s total borrowings in the first quarter was lower than last year as a 1.5 billion US dollar sovereign bond was not sold as planned this year, he said.
“I am in no rush. If we can raise money locally at 6.0 percent we are doing right now, why should I go abroad?” Mahendran said.


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