The Colombo Stock Exchange (CSE) has launched High-Yield Bonds, enabling companies with credit ratings below investment grade to raise capital through bond issuance. This initiative marks a departure from the standard requirement for listed corporate bonds, which mandates a minimum rating of at least one notch above investment grade. As a result, companies that previously struggled to meet such criteria can now access the capital markets more easily.
Only certain regulated entities, such as those overseen by the Central Bank of Sri Lanka or the Insurance Regulatory Commission of Sri Lanka, are eligible to issue these High-Yield Bonds. This includes banks, non-banking financial institutions, and insurance companies.
Although these bonds will be listed on the CSE, trading will take place on the Over-the-Counter (OTC) Platform and will be limited to “qualified investors.” Similar to those who invest in Basel III-compliant securities, these experienced investors can diversify their portfolios with bonds that offer higher potential returns, albeit with increased risk.
