Representatives of bondholders, holding approximately 50 percent of Sri Lanka’s outstanding international sovereign bonds (ISB), have raised apprehensions regarding the continuity of debt restructuring agreements in the event of a regime change anticipated in the upcoming elections this year, reports the Daily Mirror.
In closed-door discussions with representatives of Sri Lankan political parties, including opposition factions such as the Samagi Jana Balawegaya (SJB), the National People’s Power (NPP), and the United Republican Front (URF) led by MP Patali Champika Ranawaka, bondholders voiced their concerns.
During interactions with the NPP, assurances were provided that the program with the International Monetary Fund (IMF) would not be disrupted. Presently, the Sri Lankan government has concluded initial restricted discussions with nine members of the Steering Committee of the Ad Hoc Group of Bondholders over a three-week period. Sri Lanka, accompanied by its legal and financial advisors Clifford Chance and Lazard, respectively, engaged with restricted members of the Steering Committee, who were assisted by the Group’s legal and financial advisors, White & Case and Rothschild & Co., respectively.
The Steering Committee, comprising ten major members of the Group, controls around 50% of the aggregate outstanding ISBS.
Previously, the Finance Ministry stated that despite constructive discussions, parties failed to reach an agreement on restructuring terms.
During this phase, Sri Lanka, the Steering Committee, and its advisors convened for a two-day working session in London on March 27 and 28 to deliberate on the Group’s latest debt treatment proposal. Before the meetings, on March 15, Sri Lanka had submitted its own debt treatment proposal to the Group’s advisors, which was declined by the Steering Committee.
Moreover, last week, Sri Lanka rejected international bondholders’ proposal to restructure over $12 billion in debt, jeopardizing crucial International Monetary Fund support and impeding efforts to resolve a two-year-long debt crisis.
