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China calls on commercial creditors to participate in SL debt restructuring

By: Staff Writer

Colombo (LNW): China has reiterated the calls on commercial and multilateral creditors to jointly participate in Sri Lanka’s debt restructuring under the principle of fair burden-sharing.

According to Chinese foreign ministry spokesperson Wang Wenbin, the Asian economic giant has been in close communication with Sri Lanka and supported Chinese financial institutions in actively discussing debt treatment arrangements with Sri Lanka.

Wang mentioned this during a regular press briefing on Friday (April 14), in response to a question pertaining to the formal launch of discussions by Sri Lanka’s major bilateral creditors to restructure the island nation’s debt without China.

On Thursday (April 13), Japan, India and France held a press briefing to announce a common platform for talks among bilateral creditors to coordinate the restructuring of Sri Lanka’s debt.

The three creditor countries have been working closely for a coordinated debt restructuring process for the island nation.

Sri Lanka owes USD 7.1 billion to its bilateral creditors out of which USD 3 billion owed to China – its biggest bilateral lender, USD 2.4 billion to the Paris Club and USD 1.6 billion to India.

Meanwhile a committee of Sri Lanka’s international private creditors sent its first debt rework proposal to the country’s authorities regarding over US $12 billion in bonds outstanding, official sources with direct knowledge of the matter disclosed.

It is the first bondholder proposal after the island nation of 22 million people defaulted on its debt a year ago. It is a first formal step to engage with the country’s authorities, said one of the people, who asked not to be named because discussions are private. Details of the proposal were not immediately available.

Representatives for the government did not respond to a request for comment. A spokesperson representing the creditor committee declined to comment.

The group of about 30 creditors includes global investment companies Amundi Asset Management, BlackRock, HBK Capital Management and T. Rowe Price Associates.

Bondholders and government officials met in Washington this week, with legal and financial advisers for both sides present, said two sources.

Separately, the Paris Club of creditor governments said on Friday it aims to start negotiations to restructure Sri Lanka’s bilateral debt after a committee was set up by French, Japanese and Indian finance ministers, and representatives of Sri Lanka.

ISBs international bondholders have formed another ad-hoc creditor committee sometime back and the the group comprises close to 100 members and is led by a steering committee of around 10 members.

The group represents more than 55% of ISBs nondomestic holdings and it is adviced by Rothschild and White & Case China, Sri Lanka’s biggest bilateral creditor, did not join the announcement.

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