By:Staff WriterColombo (LNW): A committee of Sri Lanka’s international private creditors sent its first debt rework proposal to the country’s authorities regarding over US $12 billion in bonds outstanding out of total amount of $19.2 billion, official sources with direct knowledge of the matter disclosed.
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 officials who asked not to be named because discussions are private.
Details of the proposal were not immediately available.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.
China, Sri Lanka’s biggest bilateral creditor, did not join the announcement. Bondholders and government officials met in Washington this week, with legal and financial advisers for both sides present, said two officials.
Sri Lanka Finance Minister and the Central Bank have already initiated engagement with appointed advisors of the international and local committees of sovereign bondholders.
Separately, the Paris Club of creditor governments said on Friday it aims to start negotiations to restructure Sri Lanka’s bilateral debt after a committee was set up by French, Japanese and Indian finance ministers, and representatives of Sri Lanka.
ISBs international bondholders have formed another ad-hoc creditor committee sometime back and the group comprises close to 100 members and is led by a steering committee of around 10 members.
The group represents more than 55% of ISBs non-domestic holdings and it is advised by Rothschild and White & Case.
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.