June 25, Colombo (LNW): Sri Lankan officials and international investors are set to engage in a second round of direct negotiations this week to finalise the restructuring of $12 billion in defaulted bonds, Bloomberg reported, citing sources familiar with the situation.
A steering committee of bondholders will continue discussions on the government’s revised proposal during these talks.
The bondholders have gone “restricted,” meaning their conversations with the government are subject to temporary trading restrictions due to the potentially market-sensitive nature of the discussions, one source noted.
Representatives from both the bondholders and the government were not immediately available for comment.
Swift resolution of this matter is crucial as the country is set to hold presidential elections in mid-October.
In February, Sri Lanka presented a proposal to holders of dollar bonds as part of its strategy to restructure $27 billion of foreign debt, encompassing bonds and loans.
This restructuring is essential to maintain the flow of financing from the IMF bailout.
Last week, strategists at Barclays indicated that the restructuring process is progressing and is likely to be completed in the coming months, suggesting that the bonds present value.
Sri Lanka must secure agreements with both bondholders and bilateral lenders to continue receiving IMF disbursements under a $3 billion programme.
Bloomberg reported earlier this month that the government and a group of creditors, including India and the Paris Club, were in advanced discussions regarding an agreement.
