Sri Lanka government to launch formal bond rework offer by mid-November
Lawyers are drafting the paperwork with the aim of concluding the whole process before year-end
SRI Lanka’s new government is expected to launch a formal offer of its US$12.5 billion debt rework to bondholders by mid-November, two sources familiar with the situation told Reuters.
The outgoing government announced a draft deal, or agreement in principle, with creditors to restructure the international bonds just two days before it lost the presidential election in late September.
The two sources said lawyers were drafting the paperwork with the aim of concluding the whole process before year-end.
The conclusion would draw a line under one of the most economically painful chapters in Sri Lanka’s history, which saw it run out of dollars – and then food, fuel and medicine – before defaulting on its external debts.
A draft deal with a key group of bondholders is usually followed shortly after by the borrower formally launching the offer to all bondholders – a process dubbed consent solicitation. If supported, the old bonds are exchanged for new instruments and the country officially emerges from default.
While some feared that Marxist-leaning President Anura Kumara Dissanayake might tear up the bondholder deal in search of something more generous to the country, his government has signalled it would move forward with the bond deal, and appointed Citigroup as the dealer manager for the exchange.
The sources said he had taken a pragmatic approach and was seeking to conclude it as soon as possible. REUTERS
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