Tuesday, October 23, 2007

Middle of a War Zone - Where else would you invest?

Sri Lanka prices $1.25 billion Eurobond (NR/B+/BB-) with an 8.25% coupon and offered at Treasuries +397.2bps for a five year tenor. The offer was oversubscribed 3.2 times. Credit default swaps on the issue were trading at 360bps.

Is anyone longing the swaps for a country currently fighting a civil war? It might be an interesting play considering a similar offering by Pakistan ($750m,10years @ 6.875%), who with the return of Benazir Bhutto, is facing a disruption themselves.

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