The ‘Ad Hoc Group of Bondholders,’ representing creditors holding approximately US $12 billion of Sri Lanka’s outstanding bonds, has voiced concerns over the insufficient transparency in the debt restructuring agreement between the government and creditors. In a statement, the group expressed regret over the significant lack of transparency from official sector creditors, emphasizing their role as a constructive counterparty in efforts to reach an agreement.
The bondholders underscored the critical importance of transparency among creditors for the private sector to achieve an agreement in compliance with the parameters of Sri Lanka’s IMF program’s first review. They emphasized the need for fair and equitable debt treatment in such an agreement.
While acknowledging progress in the restructuring of official claims, particularly with the Official Creditor Committee (OCC) and China Exim Bank, the bondholders noted that details of the agreement had not been shared. The lack of transparency has raised concerns, and the bondholders stressed the impact on Sri Lanka’s recovery, stating that uncertainty surrounding the treatment of official claims has been a hindrance.
Despite expressing support for Sri Lanka’s efforts and maintaining transparency in dealings with official stakeholders, the group highlighted the absence of substantive engagement between Sri Lanka and its private creditors to date. They conveyed their commitment to swiftly reaching an agreement with Sri Lankan authorities to find a sustainable solution to the country’s debt challenges related to international bond debt.
The Finance Ministry and OCC recently announced an ‘agreement in principle’ covering US $5.9 billion of government debt, including long-term maturing extensions and interest rate reductions. The bondholders urged comprehensive engagement to facilitate a resolution to Sri Lanka’s debt challenges. The group is advised by Rothschild & Co and White & Case LLP as financial and legal advisors.
