Sri Lanka has announced the main launch of the exchange of its outstanding International Sovereign Bonds (ISBs) totaling approximately USD 12.55 billion, since 25 November 2024.
This follows the approval of the conditions of the Invitation by the new Cabinet of Ministers of Sri Lanka, which was formed on 18 November 2024, Sri Lankas Ministry of Finance, Planning and Economic Development stated in a declaration today.The Finance Ministry specified that the holders of the existing Bonds are invited to tender their Bonds and exchange them for new instruments over a three-week duration, with the last due date set for 12 December 2024.
The declaration highlighted that Sri Lanka strongly encourages all holders to participate in the exchange procedure as early as possible.The features of the brand-new instruments have actually been carefully discussed for over 2 years with holders in good faith, ensuring the finest possible outcome for all celebrations.
An agreement in concept was reached on 19 September 2024 with 2 representative groups of holders - one comprising international investors and the other domestic banks - together holding over 50% of the outstanding Bonds, it added.Additionally, the IMF and Sri Lankas Official Creditor Committee have both validated that the proposed functions of the new instruments are compatible with the criteria of Sri Lankas IMF-supported program and the Comparability of Treatment principle respectively, said the Ministry of Finance.The effective conclusion of this bond exchange will allow Sri Lanka to accomplish sovereign financial obligation sustainability and speed up the nations economic recovery.
Under the standard circumstance, Sri Lanka will achieve around USD 9.5 billion debt service payments decrease over the 4-year IMF program period, 31% decrease in the voucher rate of Sri Lankas Bonds to 4.4%, and extension of the average maturity profile of over 5 years.The effective conclusion of the bond exchange will likewise normalize relations with bondholders, the ministry expressed.The President and Minister of Finance, Planning and Economic Development, Anura Kumara Dissanayake, stated: Todays official statement of the commencement of the International Sovereign Bond restructuring with private financial institutions marks a crucial turning point for Sri Lanka.
We extend our gratitude to our external lenders, the IMF and the Official Creditor Committee for the great faith settlements that have allowed us to reach this point.With the successful achievement of Staff-Level Agreement on the 3rd review of our IMF-supported program last 22 November, I urge economic sector financial institutions to participate in the debt restructuring procedure to supply necessary relief, therefore preparing for a brighter future for Sri Lanka and its individuals, he included.