Sovereign Bond opportunity is “too good to miss”

The new chairman of Ceylon Asset Management (CAM), Malaka Bandara highlighted “this is a rare opportunity to invest in SL Sovereign Bonds at discounted prices” after a Moody’s rating report overreaction to downgrade Sri Lanka to Caa1 in September (Source: Moody’s Investor Service, 28th September 2020).

However, Moody’s recent report, was positive on SL highlighting strong FDIs expected during 2021. Thereafter, Sri Lanka International Sovereign Bond (SLISB) prices bounced back with strong buying from foreign investors. Analysts expect the SLISB prices to maintain positive momentum with improving economic fundamentals of SL.

The Ceylon Dollar Bond Fund (CDBF) managed by CAM is exclusively invested in SL Government Guaranteed Dollar Sovereign bonds and is open to local individual investors who hold a Personal Foreign Currency Account (PFCA), corporate investors with a Business Foreign Currency Account (BFCA) and Foreign Investors. Investors can exit at any time without penalties, and repatriate dollars to the originating bank account. CDBF offers true diversification for a minimum investment of US $ 1,000 while an individual SLISB purchase has a minimum trade size of US $ 200,000.

Mr. Dinesh Ambani, the new Director to join the Board of Directors of CAM, expects new Foreign Direct Investments to SL following the 2021 budget announcement this month, while expecting a positive country rating outlook. He emphasized that “local dollar investors should exploit the opportunity available through the Ceylon Dollar Bond Fund”.

Sri Lanka International Sovereign Bonds (SLISBs) underwent a turbulent October after Sri Lanka (SL) was downgraded from B to Caa1 (stable outlook) by Moody’s on 28th September 2020. As a result, SLISB prices failed to gain despite the US $ 1 billion Sovereign Bond settlement on 4th October 2020 demonstrating SL’s creditworthiness.

Moody’s on 26th October 2020, published a favorable report on foreign direct investments into SL in 2021.