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Sri Lanka Gains 98% Creditors’ Support for Debt Restructuring
December 16, 2024
Sri Lanka gained significant support from creditors holdings nearly 98% of its dollar bonds, to restructure its $12.6bn of these notes, a major step in exiting its default. The creditors are expected to swap their securities for new notes, with official results to confirm this today. This widespread support paves the way for completing the debt restructuring by the end of the year. The restructuring provides substantial debt relief, allowing Sri Lanka to rebuild its fiscal and external buffers to support economic recovery. Key features of the restructuring include extended bond due dates, reduced interest rates, and the introduction of macro-linked bonds, which offer variable payments based on the country’s economic performance. Additionally, a governance-linked note could reduce debt costs if Sri Lanka meets certain governance targets, such as increasing revenue collection. The debt exchange covers 10 bonds maturing between 2023 and 2030. The restructuring was part of Sri Lanka’s $3bn loan agreement with the IMF and also included debt restructuring with bilateral creditors like China, India, and Japan.
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