China offers Sri Lanka a below market rate syndicated loan and smaller Panda bond to further strengthen economy
China is reportedly assisting Sri Lanka with up to US$ 1.25 billion in 2018 with a below market rate syndicated loan and smaller Panda bond planned for later this year, the local media has reported.
Earlier in 2018 China Development Bank beat offers from Western international banks for a syndicated loan to win the mandate to syndicated a billion US dollar loan for Sri Lanka both in rates and tenor.
In April 2018, Sri Lanka sold a 5-year bond for 5.75 percent.
“This is actually extraordinarily good terms that we have got,” Sri Lanka’s Central Bank Governor Indrajit Coomaraswamy has been quoted as saying in the media.
The first US$ 500 million tranche of the syndicated loan is to arrive in Sri Lanka at the end of August and the balance would come in October.
China is reportedly assisting Sri Lanka sell a US$ 250 million equivalent Panda bon at the end of 2018, in yet another move to fund Sri Lanka.
According to the Central Bank Governor, the People’s Bank of China has just set up joint task force to help Sri Lanka with the Panda bond.
Reports state that the twin deals seem to indicate that China is going out of its way to bail out Sri Lanka, which until China’s entry to the scene had an impeccable debt repayment record.
China’s assistance by way of organizing a syndicated loan facility and a Panda bond issue to further boot the Sri Lankan economy is yet another indication of the close ties maintained by the two countries. Sri Lanka and China are also engaged in a negotiating trade pact that would further propel trade advancements for both countries. Given the close links between China and Sri Lanka, other foreign businesses interested in doing business with China could explore the possibility of setting up a business base in Colombo to engage with the Chinese market.
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