Sri Lanka anticipates US$500mn influx to rupee bonds, US$700mn China loan in 2020

 

Sri Lanka expects a $700 million loan from China's purchases of Chin and rupee bonds and a Samurai and Panda bond to raise dollar inflows in 2020, Nivard Cabraal, Capital Markets State Minister for Finance, said. After forex risk cover provides via a dollar-rupee swap, foreign investors expected to invest about US$ 500 million in rupee bonds in 2020, he said. Inquiries from investors are already arriving, Minister Cabraal said.

In the last two weeks, before the swap announced, there was a net purchasing of rupee bonds. The central bank will also begin work to collect $500 million from bonds denominated in Panda (Yuan) and Samurai (Yuan). Sri Lanka would not default on foreign obligations, and on October 02, he said, a billion US dollar bonds repaid with money credited to investors.

He said the downgrade by Moody's to Caa1 (CCC+ equivalent) of Sri Lanka's sovereign rating sufficiently justified, and the economy was recovering. Cabraal said it was necessary to keep the rupee steady and that the central bank had bought dollars on the interbank market in the last three months.

The central bank purchased 30 million dollars on September 29 to avoid the rupee from appreciating. While the rating agency has downgraded, he said, the country's economic agents are sending money and continuing operations.

As domestic credit slows and inflows not completely expended, Sri Lanka's rupee, loosely attached to the US dollar, appreciates. Sri Lanka reversed the worst import controls since the fall of the Bretton Woods regime in 1971 in April 2020. The import controls introduce to allow capital to repay debt obligations, Cabraal said. Sri Lanka had never lost and would have held the record that he had claimed.

OSL Take: The latest report launched by the Central Bank of Sri Lanka highlights a crucial area of focus in the next five years. The announcement that it would create investments worth Rs. Thirty billion within the next five years is a positive sign for foreign businesses/investors exploring business/investment opportunities in Sri Lanka. They could start exploring investment opportunities in the biodiversity restoration and management sector and even present to the government of Sri Lanka projects that could implement under the program.

Sri Lanka's economic policies and the continuously improving ease of doing business environment have helped promote the country as an ideal business/investment destination in the South Asian region. Therefore, the proposed issuance of the bond would offer a perfect investment opportunity for the discerning investor.

The call by the Central Bank of Sri Lanka for private investment banks has opened up an investment opportunity for foreign businesses/investors. Sri Lanka's economic indicators show the country is heading in the right development path, and the government's development agenda would also help in this aspect. Therefore, foreign businesses/investors could invest in Sri Lanka without having any doubts. The move by the Colombo Stock Exchange and the South Pacific Stock Exchange to reach a deal to collaborate on market development would serve as a confidence booster for foreign businesses/investors to invest in Sri Lankan stocks.

 VBS/AT/23102020/Z_TB2

Softlogic Capital to obtain majority shares of Abans Finance for Rs.995mn

 

Yesterday, Softlogic Capital PLC, the diversified Softlogic Holdings PLC's financial sector holding firm, said it had agreed to buy Abans Finance PLC's majority stake in a transaction of Rs.995 million from Abans PLC. Abans PLC owns 33 million shares in Abans Finance PLC or 49.67 percent.

In terms of the 1995 Takeovers and Mergers Code as amended in 2003, Softlogic Capital said it would pay Rs.30.10 per share and declare a mandatory offer to Abans Finance's minority shareholders. As of the end of June 2020, Abans Finance had an asset base of Rs.8.5 billion and a deposit base of a little over Rs.5 billion. The net asset per share of the business was Rs.24.08. Yesterday, Abans Finance shares closed at Rs.29, up Rs.8.50, or 41.46 percent.

In a media release, Abans PLC said it is divesting its interest in Abans Finance with a capital gain from Softlogic Capital. The selling price at which the mandatory bid will declare represents a 47 percent premium to the recently traded price of Rs.20.50.

Meanwhile, shortly after completing the mandatory bid, Softlogic Capital said that Abans Finance would merge with Softlogic Finance PLC. Softlogic Capital has a 72.94 percent shareholding, with the surviving company being Softlogic Finance. Softlogic Capital also said minority shareholders of Abans Finance PLC do not accept the mandatory offer grants 11 Softlogic Finance shares for every six shares held following the amalgamation by Abans Finance PLC.

"As per the most recent issued quarterly financial statement as of June 30, 2020, this ratio determined based on the corresponding net asset values of the two firms," Softlogic Capital said in a stock market filing. The accord is subject to governing approval by the Sri Lankan Central Bank, the Commission on Securities and Exchanges, and the Colombo Stock Exchange.

OSL Take: The latest report launched by the Central Bank of Sri Lanka highlights a crucial area of focus in the next five years. The announcement that it would create investments worth Rs. Thirty billion within the next five years is a positive sign for foreign businesses/investors exploring business/investment opportunities in Sri Lanka. They could start exploring investment opportunities in the biodiversity restoration and management sector and even present to the government of Sri Lanka projects that could implement under the program.

Sri Lanka's economic policies and the continuously improving ease of doing business environment have helped promote the country as an ideal business/investment destination in the South Asian region. Therefore, the proposed issuance of the bond would offer a perfect investment opportunity for the discerning investor.

The call by the Central Bank of Sri Lanka for private investment banks has opened up an investment opportunity for foreign businesses/investors. Sri Lanka's economic indicators show the country is heading in the right development path, and the government's development agenda would also help in this aspect. Therefore, foreign businesses/investors could invest in Sri Lanka without having any doubts. The move by the Colombo Stock Exchange and the South Pacific Stock Exchange to reach a deal to collaborate on market development would serve as a confidence booster for foreign businesses/investors to invest in Sri Lankan stocks.

 VBS/AT/23102020/Z_TB1

SL's foreign currency debt falls beneath US$ 500mn this year

 

The remaining foreign currency-denominated debt owed by Sri Lanka for repayment over the remainder of the year falls below US$ 500 million, like last week, the Central Bank settled its US$ 1.0 billion sovereign debt due on October 4, including coupon payments due at the time of settlement. 'On October 2, 2020, on behalf of the Government of Sri Lanka, the Central Bank of Sri Lanka effectively finalized the settlement of the maturing US dollar 1 billion Foreign Sovereign Bond (ISB) along with the due coupon payments,' the Central Bank said in a statement released on Friday.

With this settlement, Sri Lanka now has a remaining foreign currency debt of US$ 438.6 million maturing from October 5 to December 31. Hence, alleviating fears about the country's ability to fulfill its foreign currency debt in the face of impaired access to international capital markets to roll over such debt triggered by market unrest caused by a pandemic.

Last week, Moody's Investors Service issued a rare two-tier downgraded from B2 to Caa1 on the Sri Lankan sovereign, revising the outlook to stable from negative, citing Sri Lanka's high risks of debt refinancing, strained fiscal deficit and governance, and institutional vulnerabilities. Many, including the private sector, were shocked by the fact that the rating reduction came on the verge of a billion-dollar bond settlement and, despite the government's repeated assurances of its capability and commitment to connecting debt obligations as they come due.

 This settlement and other recent positive improvements in the Sri Lankan economy have positively responded from the domestic foreign exchange market. The expected inflows to the domestic foreign exchange market, backed by constructive steps taken by the State of Sri Lanka and the Central Bank of Sri Lanka, are expected to reinforce market sentiment further in the period ahead," it added.

The data shows that Sri Lanka has US$ 4.6 billion in foreign currency debt repayments due in 2021. This data includes principal payments of US$ 3.6 billion and interest payments of US$ 996 million. By the end of August, Sri Lanka had US$ 7.4 billion in foreign currency reserves. Still, debt settlements could have dented their position, as, during September, there were US$ 991.2 million in debt repayments and US$ 1.031 million in bond settlements on October 2.

Nevertheless, the narrowing gap in the merchandise trade account due to the rapid recovery of exports and the slowing down of imports, and the $700 million owed by the China Development Bank as the additional tranche of the $1.2 billion syndicated facility could partially offset the full impact of debt repayments on the reserves.

OSL Take: The decrease in foreign debt in Sri Lanka is indicative of the level of confidence in Sri Lanka's economy and investment interest. Therefore foreign investors could confidently explore investment opportunities in Sri Lankan bonds.

Sri Lanka's export portfolio expanded continuously, and now poultry will add to the long list of exports.  Further improving the discussion between the World Bank and the Sri Lankan government would result in a further increase in development assistance to the island nation. This initiative is an encouraging sign for foreign businesses/investors keen on doing business with Sri Lanka since the interest shown by multinational lending agencies would help secure funding for large scale projects.

 VBS/AT/22102020/Z_TB6

Lanka SSL bolsters new partnership with TATA Steel

 

Lanka Special Steel Ltd. (Lanka SSL) has stepped up its long-standing alliance with Global Wire India (GWI) of TATA Steel Ltd., one of the world's largest producers of steel wire, with manufacturing facilities in India and Thailand. For all of its high-quality wire goods, Lanka SSL will be the sole agent and distributor in the region, expanding its existing portfolio further.

Strong Tensile Wire (HTS) used in the concrete strengthening of electric poles and existing pre-stressed pipes, Prestress concrete strand wire used in pre-emphasizing concrete for the construction of various types of structures, spring wire for mattresses and motorcycle body parts, bead wire for tires in automotive products, shutter wire for roller gates, massive GI for gabions and healthy GI for motorcycles now included in the works.

Its steel wires useful in various sectors of the industry, from building, automotive, and power to general manufacturing and retail. It takes pride in having supplied wires around the world for many famous structures. GWI is a subsidiary of Tata Steel, one of the most geographically diversified manufacturers of steel in the world. With this strategic move, Lanka SSL, in comparison to having to pre-order them, will now ship and store its goods.

Customers can now seamlessly access these high-quality premium goods with all possible steps taken by Lanka SSL to ensure its scope and market availability. Anurag Pandey, Head of Marketing and Sales of Global Wire India, said: "We are very pleased to announce the new level of partnership with one of the most respected and reputable companies: LSSL as our sole supplier in Sri Lanka." In the retail and institutional segments that Global Wires India Division now seeks to grow and exploit in foreign markets, Tata Steel has a long-standing history of strong channel presence.

With this strategic partnership with LSSL, our loyalty to our customers lies in providing high-quality goods with distinct top-notch service levels that are further improved. On this appointment, my warmest congratulations to LSSL and best wishes for tremendous success and continued development of our business relationship.

Pravin De Silva, president of Lanka Special Steel, stated: "We are delighted to enhance our fruitful partnership with a global manager in steel wires. As the material is readily available in Sri Lanka, this will be beneficial to our customers in various ways to increase their cost-effectiveness. Over the past 16 years, Lanka SSL has provided its clientele with outstanding customer service and superior products, especially in the booming construction sector in Sri Lanka, making it an industry leader. With repetitive and loyal customers, LSSL and their highly skilled team have established their reputation.

OSL Take:  Sri Lanka is presently undergoing an aggressive program of growth covering all principal areas of the economy on the island.  The Colombo Port City development is one of the country's major continuing mega-projects to match Sri Lanka with many financial hubs in South East Asia. Given the geographical location of Sri Lanka in the Indian Ocean, the country's relaxed corporate climate and numerous trade arrangements and the island's trade concessions have created Sri Lanka, the perfect company destination in the South Asian area. Foreign businesses/investors could, therefore, investigate possibilities for business/investment in the Port City project in Sri Lanka.

 VBS/AT/22102020/Z_TB5

 

 

CSE declares REITs as an investment opportunity to benefit from real estate investment

 

The CSE has announced the introduction of REITs. For average investors, REITs offer an opportunity to enjoy the benefits by investing in real estate and investing in publicly traded CSE securities. While investing in real estate seems to be a standard option, increasing property costs pose a significant challenge for individual investors who usually use bank loans to fund such investments. This timely launch by the CSE and SEC offers greater access to commercial real estate projects for all investor segments and an opportunity to take advantage of the recently witnessed spiraling property prices.

In 1960, in the United States, REITs were first introduced, providing a mechanism for individual investors, especially middle-income earners, to generate revenue by investing in large commercial real estate. With its increasing popularity, particularly in Thailand, Malaysia, and India, this product has made rapid progress in the Asian markets. A REIT is essentially a structure that usually owns and operates real estate, which generates income. Office buildings, shopping centers, apartments, hotels, resorts, self-storage facilities, and warehouses, which include the revenue-generating real estate assets held by the REIT.

A REIT will allow unitholders to receive a portion of the revenue generated by the rental, lease, or sale of these assets. Hence the CSE must allocate share dilution directly to the REIT unitholders. The CSE and SEC have adopted a system mandating the distribution to their investors of 90 percent of the revenue generated. The institutions developed this creative introduction explicitly with the local environment in mind, with the expectation that it would open new horizons for real estate developers and owners to turn completed revenue-generating projects into REITs. Thus this would have their units listed on the CSE under the system now made available to them and publicly traded on the secondary market, similar to equity-generating projects.

The SEC adopted the structure for REITs using rules drawn up by the SEC under sections 53 and 13 of the SEC Act. A notification in the Gazette enforced the rules as mentioned earlier on 31 July in the form of a designated structure. The detailed creation of SEC laws will regulate the overall process of REITs in Sri Lanka.

The CSE also formulated listing guidelines for the listing of units of REITs. A REIT will allow investors by investing in this lucrative investment instrument, which would deliver long-term returns, to diversify their portfolios further. Investors would benefit from a steady income stream, quick entry, and exit route through the secondary market. They would also benefit from the returns on the overall appreciation of real estate properties. The economy would also benefit from implementing anticipated job creation REITs, economic growth, increased tax revenues, listed liquidity, and foreign direct investment.

OSL Take: OSL Take: Sri Lanka's government's aggressive development program has further risen property prices, making properties on the island an accessible investment opportunity with short-term advantages. The proposed project of Colombo Port City will also improve land value. Foreign businesses/investors could, therefore, explore possibilities for business/investment in the real estate industry in Sri Lanka.

VBS/AT/22102020/Z_TB3

CIOB highlights new investment opportunities in the construction industry

 

The Ceylon Institute of Builders, a leading building institution and service provider in the construction industry, organized a seminar to raise awareness among decision-makers, practitioners, and other industry stakeholders of the new Government's new opportunities. Dr. Priyathbandu Wickrama, Secretary for the Ministry of Water Supply, Urban Development Authority, Consultancy General Manager Ananda Samarasinghe, Infrastructure, and IT Board of Investment Director Ranjan Sibera, CIOB President Dr. Rohan Karunaratne, and CIOB Secretary Eng. Saliya Kaluarachi joined the program as a presenter.

Dr. Wickrama claimed in the keynote speech that the Government would serve as a catalyst to help the construction industry and would make the payments via the planned interim budget due to the construction companies. He further mentioned that four main cities to be built, i.e., Hambantota, Trincomalee, Jaffna, and Colombo, with nine corridors of the economy. In these leading cities.

He also said that the state would use foreign funding from overseas construction firms and give sub-contracts for mega projects to local companies. The builders for local investment would be local construction firms. Dr. Priyathbandu Wickrama told the participants that in the next few years, the Government plans to invest around Rs. 790 b on other developments in water projects. He said they needed professional contractors for construction.

The Government claims that in a system made under a national strategy, there are many resources available for the construction industry. Siberia said that the Government has agreed to achieve its objectives by building as the primary industry and has called foreign players to undertake international projects. Via the construction sector, the BOI hopes to contribute 5% to the GDP.

Dr. Karunaratne claimed that he wished to help the membership of the CIOB and the industry with the new opportunities available to them in the new growth plans in Sri Lanka, in particular. He said the sector had been seriously affected over the last few years, adding that the country had acquired strong leadership with the mandate provided by the majority of citizens.

To achieve anticipated growth and financial stability, the CIOB aims to assist market stakeholders by disseminating knowledge from time to time through seminars and forums. This active seminar attends by CIOB participants from all major and specialist construction firms and branded manufacturers, experts, academics, and other industry stakeholders.

OSL Take: Sri Lanka is presently undergoing an aggressive program of growth covering all principal areas of the economy on the island.  The Colombo Port City development is one of the country's major continuing mega-projects to match Sri Lanka with many financial hubs in South East Asia. Given the geographical location of Sri Lanka in the Indian Ocean, the country's relaxed corporate climate and numerous trade arrangements and the island's trade concessions have created Sri Lanka, the perfect company destination in the South Asian area. Foreign businesses/investors could, therefore, investigate possibilities for business/investment in the Port City project in Sri Lanka.

 VBS/AT/22102020/Z_TB2

GrandSpace unbolts at Astoria-Colombo

 

GrandSpace will expand its services to Astoria-Colombo, situated in the heart of the city center, by providing its wide range of customers with the best services and increased connectivity at a popular location in the center of Colombo. This launch will be GrandSpace 's second initiative to include thoroughly serviced office facilities, including virtual offices, conference rooms, and utterly facilitated co-working spaces for day offices.

The first Kohuwala project continues to accommodate multiple small businesses and entrepreneurs with various inexpensive and scalable solutions in different fields of commerce. The new location at Colombo 3 will make the new center one of the city hub's most sought after sites, offering upgraded facilities worthy of the dynamic business lifestyle you want.

For postal purposes and other business requirements, the virtual offices also provide customers with the primary official Colombo 3 location address. Customers are often equipped with a dedicated telephone line, thereby opening up an opportunity for the customer to retain their private office without the hassle of maintaining a physical office space.

These services come with 24/7 electricity, comfortable air-conditioned rooms, an expansive lobby room, in-house tea/coffee service, housekeeping, 24/7 CCTV surveillance, adequate parking, a dining area, and resting bays for a fast power-nap or quiet time at noon, along with other services.

The versatility in office spaces offers the deciding factor for a new company and a professional location for small businesses, budget-friendly with no furnishing or infrastructure hassle, which GrandSpace already provides. "For those who are dissatisfied with cramped workplaces and those who work from home for reasons of health protection, GrandSpace is the solution. Here, anyone can opt for a seat where you are entitled to your own technical, but private and secure office space," GrandSpace Director Samila Maddumage said.

Sri Lanka is presently undergoing an aggressive program of growth covering all principal areas of the economy on the island.  The Colombo Port City development is one of the country's major continuing mega-projects to match Sri Lanka with many financial hubs in South East Asia. Given the geographical location of Sri Lanka in the Indian Ocean, the country's relaxed corporate climate and numerous trade arrangements and the island's trade concessions have created Sri Lanka, the perfect company destination in the South Asian area. Foreign businesses/investors could, therefore, investigate possibilities for business/investment in the Port City project in Sri Lanka.

OSL Take: Sri Lanka's government's aggressive development program has further risen property prices, making properties on the island an accessible investment opportunity with short-term advantages. The proposed project of Colombo Port City will also improve land value. Foreign businesses/investors could, therefore, explore possibilities for business/investment in the real estate industry in Sri Lanka.

 VBS/AT/22102020/Z_TB1