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Sri Lanka Proposes New Restructuring Plan to Dollar Bondholders

Sri Lanka has submitted a fresh restructuring proposal to its dollar bondholders through the guidance of its adviser, Lazard, as part of the nation’s ongoing efforts to complete the overhaul of its defaulted debt. Individuals familiar with the matter revealed that this counter proposal was presented in response to a bondholder group’s offer in October, which suggested a 20% haircut and the issuance of macro-linked bonds. The sources, who opted to remain anonymous due to the confidential nature of the negotiations, refrained from providing specific details about the new offer.

There are indications that government representatives might soon travel to London for discussions with Sri Lanka’s commercial creditors. The successful restructuring of Sri Lanka’s $27 billion foreign debt is crucial to maintaining a steady flow of financing from the International Monetary Fund bailout. President Ranil Wickremesinghe recently stated that the authorities anticipate completing the restructuring process within the first six months of the year.

Efforts to obtain comments from Sri Lanka’s treasury secretary, junior finance minister, and central bank governor were unsuccessful. Additionally, representatives from both the bondholder group and Lazard were not immediately available for comment.

It’s worth noting that the government had previously reached restructuring agreements with official creditors, including China, India, and the Paris Club, as well as with holders of its local debt.

Source: Bloomberg

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