Sri Lanka Ports to issue $1 bln bond in October-source

COLOMBO, July 12 (Reuters) - Sri Lanka's state-owned Ports Authority will go to international capital markets in October to sell a $1 billion corporate bond, a source close to the deal said on Thursday.

Proceeds from the issue will be used repay part of its yen-dominated loans and to expand port facilities.

In May, Sri Lanka Ports Authority Chairman Priyath Wickrama told Reuters that the port authority planned to issue two 10-year bonds of $500 million each, with the first one to be sold around July and the second one later this year. [ID: nL4E 8G41XV]

"It will be in October and the plan is to go for the both ($500 million bonds) at once," the source who has direct knowledge of the Port Authority's bond issue told Reuters.

It will be the biggest corporate bond issue by the $59 billion economy after the country's largest lender, Bank of Ceylon, raised $500 million through a five-year paper in early May.

The port authority has already mandated HSBC as one of its lead managers.

Since the end of a 25-year war in 2009, Sri Lanka has been investing heavily in ports, including a $1.5 billion Chinese-financed new port in the southern district of Hambantota.

Sri Lanka is also in the process of selling a $1 billion sovereign bond later this month. The central bank started road shows on Thursday. (Reporting by Shihar Aneez; Editing by Kim Coghill)