IFC, the World Bank-affiliate, in a major step towards supporting the private sector in Sri Lanka amid a significant economic downturn, has issued its first-ever rupee-denominated bond in the country.
The bond – called the ‘Serendib Bond’ – is a significant milestone towards ensuring that the private-sector has access to long-term offshore financing in local currency—while hedging foreign exchange risks—at a critical time, IFC said in an announcement on Wednesday.
The involvement of triple A rated issuer such as IFC in introducing the Sri Lankan rupee to the international capital markets will help create a benchmark for future rupee issuance, and provide offshore investors the ability to gain exposure to the currency.
“IFC’s first rupee-denominated bond in Sri Lanka comes at a critical time – in the midst of the COVID-19 pandemic – and will be significant in contributing to support the development of a more resilient, efficient and inclusive financial sector,” said Hector Gomez Ang, Regional Director for South Asia at IFC. “With this landmark transaction, we aim to encourage private sector to invest in the future of the country, paving the way for job creation and inclusive and sustainable growth.”
Proceeds from IFC’s $5 million equivalent bond will finance Sunshine Consumer Lanka Ltd, a subsidiary of Sunshine Holdings PLC. The investment will support the domestic confectionary supply chain and help strengthen the overall competitiveness of the country's fast-moving consumer goods (FMCG) sector.
“IFC’s partnership will allow us grow further through diversification of our businesses and expand our presence in the consumer goods sector,” said Vish Govindasamy, Group Managing Director of Sunshine Holdings PLC. “We are also happy to be a part of IFC’s first Serendib Bond – which protects our business from exchange rate volatility as well as any increase in interest rates, while giving us access to foreign credit markets to grow the business.”