Sri Lanka and its major bilateral creditors with the exception of China have launched formal debt restructuring talks, as per sources. This is because of the slow pace of talks with China where the island nation was deadlocked between China and other lenders regarding dealing with its debt issues. Finance chiefs from India, Japan and sovereign Paris Club creditors held a joint briefing with the IMF yesterday to mark the start of the restructuring. Both Sri Lanka and its creditors have said they would like China to participate in restructuring discussions. Another source said that Sri Lanka had committed not to negotiate a separate deal with China, a concern for other creditors. The sources added that yesterday’s talks were also to ensure that China did not have any leadership role in the creditor group’s guiding talks. To quickly recall, in late-March, the IMF approved a $3bn four-year bailout for Sri Lanka urging for a quick resolution of its deb talks. 

Sri Lanka’s dollar bonds were trading steady at ~34 cents on the dollar.

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