The Sri Lankan government officially launched the exchange of its outstanding International Sovereign Bonds, totaling approximately $12.55 billion as of November 25, 2024. This move follows the approval of the terms and conditions by the new Cabinet of Ministers, which was formed on November 18, 2024, reads a FT, SL report.
The Ministry of Finance invited holders of the existing bonds to tender them for exchange into new instruments over a three-week period, with the final deadline set for December 12, 2024. The Ministry strongly encourages bondholders to participate early in the exchange process, highlighting that the new instruments have been developed through more than two years of careful discussions to ensure the best outcome for all parties involved.
An agreement in principle was reached on September 19, 2024, with two representative groups holding over 50% of the outstanding bonds: one group comprising international investors, and the other domestic financial institutions. Both the International Monetary Fund (IMF) and Sri Lanka’s Official Creditor Committee have confirmed that the new instruments are aligned with Sri Lanka’s IMF-supported program and the comparability of treatment principle, respectively.
The successful completion of the bond exchange is expected to significantly improve Sri Lanka's sovereign debt sustainability and boost economic recovery. It is projected to result in a $9.5 billion reduction in debt service payments over the four-year IMF program period, a 31% reduction in the coupon rate of the bonds to 4.4%, and an extension of the average maturity by over five years. Additionally, this exchange will help normalize relations with bondholders.
President and Finance Minister Anura Kumara Dissanayake emphasized the importance of the milestone, stating, "We extend our gratitude to our external creditors, the IMF, and the Official Creditor Committee for the good faith negotiations that have brought us here. I urge private sector creditors to participate in the debt restructuring process, providing vital relief and paving the way for a brighter future for Sri Lanka and its people."
Holders of the bonds can find more information and confirm eligibility via the official invitation. For assistance with the process, participants are encouraged to contact the dealer manager or the information and tabulation agent.
Bd-pratidin English/ Jisan
