Business Times

Infrastructure bonds to set economic growth

Sri Lanka should see infrastructure bonds in the near future now that the country's economic confidence is setting in and analysts see the capital market as a main way out to funding infrastructure.
They also caution that one constraint in countries like Sri Lanka where mismanagement and corruption rates are high, is that the bond issues (to raise such funding) needs to be guaranteed by the government or at least by a bank.

"But at a time when the state itself is raising funds from the market, it becomes pointless for them to guarantee such an issue, unless you get a bank to guarantee it as it is almost the same as borrowing from a bank," an analyst said.

He added that given competing demands on scarce resources, governments are increasingly faced with the challenge of finding sufficient capital to build, refurbish, expand and maintain vital infrastructure. “The situation is even more challenging as the lack of adequate infrastructure clearly inhibits economic growth aspirations," he said, adding that the involvement of private capital is no longer a choice but has become a necessity.

Bond markets provide the ideal platform for marrying the needs of long-term investors such as pension funds and insurance companies seeking fixed ‘annuity’ type returns with infrastructure projects seeking long-term finance. A bond market expert noted that a well-functioning debt capital market provides the ideal bridge between long-term savings, seeking fixed returns and companies / projects seeking long tenor finance.

“It’s a very attractive supplement to traditional bank debt, but a number of constraints have held back this channeling of capital flows. These impact both availability of capital and demand for funds. Appropriate risk mitigation (including structuring) and policy reform could help bridge this gap," he added.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
 
Other Business Times Articles
Govt. seeks new $140 mln loan for Hambantota port work
European travellers cruise into Colombo
Ceylon Chamber of Commerce welcomes the Lifting of the State of Emergency
Asia Capital gears to resurrect film industry
Dilith-dumping is a loser’s term
Sony Bravia high definition televisions enter Sri Lanka
COMMENT - Hasty move on vehicle imports
What you should know when you see a crowded bus!
Where to from here for NRFC account holders?
Bringing topline growth through sustainable strategy
RAM upholds AAI's 'BBB-' after its acquisition by Softlogic
SL first needs clearing house to up commodities, derivatives game
FCCISL local partner for World Tea Expo 2011 in China
Corruption: Even accepting a pen at a conference can be considered a bribe
Standard & Poor's president steps down after historic US debt downgrade
CDB raises Rs. 718 mln to support expansion
Sri Lankan private sector to import entire basmati rice quota from Pakistan
Sri Lankan companies urged to follow sustainable business practices
47th ICASL Annual Report Awards gets off the ground
Picture shows potential clients visiting Zhara HS's stall at ITB Asia 2010
3M enters first aid dressing market in Sri Lanka
HSBC awards gives impetus to young entrepreneurs
Sierra goes into pipes
Tokyo Cement to set up a 6MW Dendro power plant in Mahiyangana
3,000 vocational students to get access to Virtusa training
Symantec Endpoint Protection 12 launched in SL
Wataniya links up with Ericsson to implement converged billing solution
SL bakery scores 20,000 Facebook fans
EDB ties up with Rainbow Pages to introduce Sri Lankan Exporters e-Directory
Diethelm Travel introduces new fleet of vehicles to Taj Samudra, Colombo
Melfort Green Teas to tie up with Coca-Cola USA to produce Lanka special green tea
Browns buys more property, eyes some more
MTD Walkers to change name by March next year
Infrastructure bonds to set economic growth
Ceylon Tea sees bigger share in teas sold
HVA Farms to go organic and eco
We give what we can: SEC
Sri Lanka Customs probes empty fertilizer bag scam
Sony brings Internet TV for Sri Lankans
RAM assigns 'AA+' / Stable rating to Commercial Bank
Brokers in different plateau!
Dimo Batta mobile trade service attracts consumers in a big way
Aitken Spence’s sixth Indian hotel opens in December
Piramal profits double

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 1996 - 2011 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved | Site best viewed in IE ver 8.0 @ 1024 x 768 resolution