Sri Lanka’s dollar bonds inched higher by ~2% after news that Finance Minister Basil Rajapaksa would be visiting India in a fortnight to formalize an economic relief package amid depleting forex reserves and food shortages. Sri Lanka has already been in talks with India with the latter announcing a $900mn loan to Sri Lanka to build up its depleted foreign reserves and for food imports as recently as January 2022. “The close integration of our economy with India would be very beneficial, one third of our tourist arrivals are from India”, said Sri Lanka’s foreign minister. Earlier in February, an agreement to grant Sri Lanka a credit line of $ 500mn for fuel purchases was sealed as part of an immediate economic relief package.

Earlier this week, Sri Lanka’s dollar bonds were trading weaker after parliamentarians called for an “orderly negotiated postponement” of outstanding foreign debt. Sri Lanka’s 5.75% 2023s were up over 1.2 points to trade at 56.3 cents on the dollar.

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