Sri Lanka’s first US$ fund launched
Developing the capital market and making it a game changer in the economic development of Sri Lanka puts the country on trade towards making it a financial hub, said Nalaka Godahewa, Chairman of the Securities and Exchange Commission (SEC) of Sri Lanka. He made thse comments at the Ceylon Dollar Bond Fund launch held at the Taj Samudra in Colombo last Wednesday.
He said, “The dollar can make a change from the Sri Lankan rupee for investments coming into the country avoiding the exposure to currency risk.” This will be an important milestone in the capital market development journey and will become an evolutionary product and hopefully people will be able to make use of it.
The Ceylon Dollar Bond Fund is the country’s first ever dollar denominated unit trust with the approval of the Central Bank and Ministry of Finance. Foreign investors and Board of Investment (BOI) companies can now invest in high yielding Sri Lankan dollar bonds, via the ‘Ceylon Dollar Bond Fund’ innovated by Ceylon Asset Management (CAM), structured exclusively in US dollar units.
Dr. Godahewa also stressed, “We have been ambitious of the developments in the capital market during the past few years. Sri Lanka’s capital market has an interesting problem when talking about development of new products. We want to develop new products but we face infrastructure problems. To introduce products in the capital market you will require certain types of infrastructure in place. Somehow you need to think out of the box and come up with innovative ideas.”
CAM Managing Director, Dulindra Fernando said this is Sri Lanka’s first ever dollar fund launch as well as the financial industry going international for the first time. Unit trusts have been granted the first ever dollar funding license by the SEC. The financial services role is missing in Sri Lanka and the country today has a unique opportunity to support South Asia in investment services with regional dollar products, he said.
The Bond Fund invests exclusively in dollar denominated Sri Lankan sovereign bonds, bank and corporate issued dollar bonds. Managed by CAM, with Deutsche Bank AG as the trustee and custodian, the fund will be rated by Fitch Ratings, where the risk exposure is limited to sovereign and bank risk.
The open-ended fund allows for withdrawal at anytime and to invest without the requirement of a Securities Investment Account. The minimum investment for the fund is US$ 1,000 to attract Sri Lankan Diaspora investors.