A committee of Sri Lanka’s international private creditors sent its first debt rework proposal to the country’s authorities regarding over $12 billion in bonds outstanding, according to three sources with direct knowledge of the matter.
It is the first bondholder proposal after the island-nation of 22 million people defaulted on its debt a year ago. It is a first formal step to engage with the country’s authorities, said one of the people, who asked not to be named because discussions are private.
Representatives for the government did not respond to a request for comment. A spokesperson representing the creditor committee declined to comment.
The group of about 30 creditors includes global investment companies Amundi Asset Management, BlackRock, HBK Capital Management and T. Rowe Price Associates.
Bondholders and government officials met in Washington this week, with legal and financial advisers for both sides present, said two sources.
China, Sri Lanka’s biggest bilateral creditor, did not join the announcement.
After the COVID pandemic that ruined the tourist sector, a spike in prices of imports following the start of the Ukraine war, and economic mismanagement, Sri Lanka fell into its worst financial crisis in more than seven decades.
Sri Lanka secured last month a $2.9 billion program from the International Monetary Fund to tackle its huge debt burden.
It is the first bondholder proposal since the 22-million-person island nation defaulted on its debt a year ago. According to one of the persons, who asked not to be identified since the discussions are private, it is the first formal step toward engaging with the country’s authorities.
Since the 22 million-person island nation’s debt defaulted a year ago, this is the first bondholder proposal. It is the first official move toward engaging with the nation’s authorities, according to one of the parties, who wanted to remain anonymous because the conversations are private.
This proposal is a crucial move toward resolving the financial issues that arose from the country’s default last year.