Sri Lankan officials and global investors are expected to hold a second round of direct talks this week to finalize the restructuring of $12 billion in defaulted bonds, according to sources familiar with the matter.
A group of bondholders, known as the steering committee, will continue negotiations on the government’s new proposal in this round of discussions. These bondholders have entered a “restricted” status, meaning conversations with the government are covered by temporary trading limitations due to the market-sensitive nature of the topics under discussion.
Representatives for both the bondholders and the government were not immediately available for comment.
Swift progress is crucial as the country is set to hold presidential elections in mid-October. In February, Sri Lanka submitted a proposal to holders of dollar bonds as part of its plan to restructure $27 billion in foreign debt, which includes bonds and loans. The restructuring is essential to maintain the flow of financing from the IMF bailout.
Last week, strategists at Barclays noted that the restructuring was advancing and likely to be completed in the next few months, suggesting that the bonds offer value.
Sri Lanka must secure agreements with both bondholders and bilateral lenders to continue receiving IMF disbursements under a $3 billion program. Bloomberg reported earlier this month that the government and a group of creditors, including India and the Paris Club, were in advanced talks over a deal.
Source: Bloomberg
