The government has issued a US$50 million local dollar bond aimed at raising foreign currency from local commercial banks—marking the first such issuance since Sri Lanka declared bankruptcy in 2022.
According to the announcement, the bond will carry a maturity period of one to three years, while the interest rate will be determined through competitive bidding.
Only locally incorporated licensed commercial banks are eligible to invest, with subscriptions open from December 3 to 10. Interest on the short-term liquidity facility, denominated in US dollars, will be paid by the Treasury every six months or annually, subject to existing tax regulations.
The Treasury issued the notice on Friday after receiving approval from the Central Bank under the Foreign Exchange Act No. 12 of 2017. The serially numbered bonds will be auctioned with a minimum investment of US$1,000,000, with additional investments in multiples of US$100,000.
Participating banks must make payments to the Central Bank of Sri Lanka’s account at the Federal Reserve Bank of New York.
The newly established Public Debt Management Office of the Ministry of Finance issued the detailed notice, following a Cabinet decision made on October 13, based on a proposal presented by President Anura Kumara Dissanayake.
According to the Cabinet paper, the government believes that with improved foreign exchange inflows and strengthened liquidity in the domestic forex market, issuing a local dollar-denominated debt instrument will provide a new investment avenue for local banks.
A market survey conducted in August by the Central Bank’s Public Debt Department indicated strong investor appetite, with interest in investing up to US$100 million for tenures ranging from less than one year to three years.
