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Sri Lanka Reaches Debt Restructuring Agreement with Creditors
September 20, 2024
Sri Lanka reached an agreement in principle with its bondholders for restructuring ~$12.6bn of bonds, according to a statement released yesterday. The announcement came after the third round of talks concluded and just two days before the country heads into elections. The government and bondholders agreed on a 27% haircut on principal of existing bonds (vs. a 28% haircut proposed earlier in July). In addition to reaching a deal with local bondholders, Sri Lanka also secured a deal to restructure $3.2bn of debt with China Development Bank, as per the statement. The revised deal includes a plan to issue macro-linked bonds and introduces “governance-linked bond features” that would cut Sri Lanka’s repayments if it meets certain governance and anti-corruption-related targets. Sri Lanka now expects to receive formal confirmation from the IMF on the deal and will work with the Official Creditors Committee (OCC) to secure confirmation of compliance for the deal.
Sri Lanka’s dollar bonds rose with its 7.55% 2030s up by 1.3points to 53.75 cents on the dollar.
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