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Sri Lanka Said to Have Proposed Alternate Debt Restructuring Plan
February 22, 2024
Sri Lanka is said to have proposed an alternate commercial debt restructuring plan to bondholders, according to sources. This is said to be a counter offer to the proposal earlier in October, where it proposed a 20% haircut and issuance of macro linked bonds. The details of the offer are not known yet. The sources added that Sri Lanka conveyed the proposal through its adviser Lazard and the country officials may soon travel to London to meet their commercial creditors. The country is looking to overhaul $27bn of its foreign debt to ensure funds from the IMF keep flowing. Sri Lanka has already struck a $5.9bn debt restructuring deal with its bi-lateral creditors.
Following the latest proposal, BofA has upped its recommendation on Sri Lanka’s dollar bonds to ‘overweight’. Bofa estimates a “fair value of country’s EXD at $51-$56 range in expected recovery value at 12-14% exit yield”.
Sri Lanka’s dollar bonds were among the top gainers with its 7.85% 2029s up by over 1.5 points to trade at 52.5 cents on the dollar, yielding 24.9%.
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