November 27, Colombo (LNW): Sri Lanka has officially launched the International Sovereign Bond Exchange, following approval by the Cabinet of Ministers, to address the country’s sovereign debt and accelerate its economic recovery. Labour and Economic Development Deputy Minister Prof. Anil Jayantha Fernando announced that new bonds will be issued to replace the existing ones, with the process designed to reduce debt service payments and ensure financial sustainability. The Finance Ministry stated that the bond exchange aligns with the terms and conditions approved by the new Cabinet formed on November 18, 2024, following extensive negotiations with bondholders over the past two years.
The initiative is projected to reduce debt service payments by approximately USD 95 billion over the four-year IMF program period, decrease the coupon rate on Sri Lanka’s bonds by 31% to 4.4%, and extend the average maturity profile by over five years. Bondholders are invited to participate in the exchange by tendering their existing bonds for new instruments during a three-week period ending December 12, 2024. Details for participation, including the procedure for submission, are available on the designated invitation website, subject to eligibility and registration.
The bond exchange represents a collaborative effort, with agreements in principle reached with international investors and domestic financial institutions holding over 50% of the bonds. Both the IMF and Sri Lanka’s Official Creditor Committee have confirmed the compatibility of the new instruments with the country’s IMF-supported program parameters. The Finance Ministry emphasized that the successful completion of this process is essential for achieving debt sustainability, restoring trust with creditors, and normalizing relations with bondholders.
President Anura Kumara Dissanayake, who also serves as Finance, Planning, and Economic Development Minister, underscored the importance of this milestone, urging private creditors to participate in the restructuring to provide essential relief. “Today’s announcement marks a significant step in our journey to economic recovery. We extend our gratitude to our external creditors, the IMF, and the Official Creditor Committee for their good faith negotiations that have brought us here,” he stated. The President further assured that the restructuring would lay the groundwork for a brighter future for Sri Lanka and its people.
