Sri Lanka’s bondholders sign off on USD 12.55 billion debt overhaul

Sri Lanka’s bondholders signed off on the government’s proposal to restructure its $12.55 billion of international bonds, a key step in finalising the island nation’s debt rework.

Final results showed holders representing 97.86% of the outstanding principal on the existing bonds voted in favour of the plan, which will swap Sri Lanka’s defaulted bonds for a series of new fixed income instruments, the government said in a statement dated Dec. 16.

Sri Lanka, which defaulted on its foreign debt for the first time in May 2022 due to its high debt burden and dwindling foreign exchange reserves, had said on Friday that initial results showed holders representing 96% of the outstanding principal on the existing bonds voted in favour of the restructuring plan.

The South Asian island nation’s new instruments include a governance-linked bond, which offers a 75-basis-point reduction in the interest rate payable if Sri Lanka meets certain governance targets, and several bonds linked to economic performance.

With the finalising of the bond exchange, Sri Lanka will become the fourth country to conclude a restructuring of its bonds this year, following in the footsteps of Ghana, Ukraine and Zambia.

Source: Reuters
--Agencies