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Sri Lanka nears deal with investors to restructure $12 bn global bonds

April 18, Colombo (LNW): Sri Lanka is poised to finalise an agreement with investors to restructure its defaulted $12 billion global bonds by mid-May, Bloomberg reported citing strategists at Standard Chartered.

Despite initial talks with dollar bondholders failing to produce a breakthrough, Sri Lanka aims to reach a deal in the coming weeks, according to report.

Remaining disagreements centre on the structure of “macro-linked” bonds, proposed by bondholders, which would adjust payouts based on the nation’s economic performance.

“We think timelines are critical and expect an agreement by mid-May,” wrote strategists, including Shankar Narayanaswamy, in a note.

Standard Chartered warned that further delays could coincide with the planned presidential elections.

Sri Lanka’s dollar bonds experienced notable gains on Wednesday, with the March 2029 note rising 2 cents to 56.4 cents per dollar.

Bonds maturing in March 2030 and April 2028 also saw increases.

Regarding IMF talks, Finance State Minister Shehan Semasinghe, who is Sri Lanka’s leading delegation at the Spring Meetings in Washington, emphasised that the government would engage in further discussions with IMF staff on the latest proposals.

Semasinghe expressed hope for continued dialogue with bondholders to reach common ground ahead of the IMF board’s consideration of the second review of Sri Lanka’s Extended Fund Facility (EFF) programme.

The restructuring of foreign debt, including bonds and loans, totaling $27 billion, is pivotal for Sri Lanka to secure financing from its $3 billion IMF bailout.

The government has already concluded agreements with official creditors, such as China, India, and the Paris Club, as well as with holders of local debt.

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