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Sri Lanka is working on a debt restructuring proposal wherein its existing dollar debt will be replaced by new securities. According to the statement by the Finance Ministry, banks have been invited to submit their proposals for the transaction. Last week, it was reported that Sri Lanka will begin debt restructuring talks starting this week. Making progress on the restructuring talks will unlock a $337mn payout from the IMF for Sri Lanka, for which it already has won initial approval. According to S&P Global ratings, sovereign distressed debt exchanges have been on the rise since the pandemic as economies struggle with higher cost of borrowing. Few days ago, Zambia and its creditors agreed on a debt restructuring agreement.
Sri Lanka’s dollar bonds were slightly higher with its 6.825% 2026s up by 0.36 to 60.5 cents on the dollar.
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