Private creditors ready for ISB restructure negotiations
Two groups of private creditors are now ready to hold international sovereign bond (ISB) debt restructuring negotiations with Sri Lankan authorities, as the Finance Ministry and the Central Bank have almost completed their debt treatment discussions with bilateral creditors.
Although the total government external debt amounts to US$ 36.73 billion as at end of 2022, only bilateral debt is considered at present for the debt restructuring process to obtain the $2.9 billion International Monetary Fund (IMF) Extended Fund Facility.
A group of overseas private creditors announced recently that it is ready to hold complex debt restructuring talks with Sri Lanka consistent with the IMF programme, Finance ministry sources said.
The total ISB debt stock with arrears as at end of 2022 was $14.286 billion with different maturity periods and varied interest rates, the Ministry’s latest data shows.
It was categorised as commercial debt and most of ISB’s maturity periods will fall on 2024, 2025, 2026, 2027, 2028 and 2029. Each and every ISB has different dates of maturity and varied interest rates.
The only issue at hand is the repayment of $1.25 billion ISB on April 18 this year. The government is servicing other multilateral loans including from the World Bank and ADB amounting to $9.499 billion.
Sri Lanka’s private bondholders have told the IMF that they are prepared to negotiate with Sri Lankan authorities in debt restructuring talks consistent with the parameters of the global lender’s programme.
The Ad Hoc Group of Sri Lanka bondholders conveyed its stance in a letter directed to IMF Managing Director Kristalina Georgieva last month. “The bondholder group through its 10-member steering committee will arrive at a consensus to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets during the IMF Programme period,” the letter pointed out.
ISBs international bondholders have formed this ad-hoc creditor committee comprising close to 100 members and is led by a steering committee of around 10 members
The group advised by Rothschild and White & Case represents more than 55 per cent of ISBs non-domestic holdings. The second group of ISB holders with holdings in excess of $1 billion across all series of ISBs has also expressed willingness to commence negotiations as there were signs of considerable progress in bilateral debt restructuring procedures. The group advised by Baker & Mackenzie comprises eight local banks and is led by a steering committee.
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