Strong Demand for Sri Lanka’s First Post-Default Dollar Bond

Sri Lanka has raised US$50 million from its first domestic Dollar Bond auction since the 2022 debt crisis, signalling renewed confidence in the country’s financial recovery. The auction, managed by the Public Debt Management Office, drew US$89 million in total bids, with strong interest for one- and two-year maturities. The Government accepted US$33 million in one-year bids at 5.7% and US$17 million in two-year bids at 6.1%.

The three-year tranche drew only US$1 million, and no bids were accepted. Officials say the issuance helps diversify funding sources, reduce pressure on domestic rupee borrowing and serve as a marker of stabilising market sentiment. The Finance Ministry has indicated the programme could be expanded up to threefold based on future needs and market conditions. The successful offering marks a key milestone in Sri Lanka’s gradual re-entry into foreign-currency debt markets.

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