COLOMBO - Sri Lanka is sliding inexorably into default as the grace period on two unpaid foreign bonds nears an end, the latest blow to a country rattled by economic pain and social unrest.
as it struggled with a dollar crunch that's led officials to implement capital controls and import curbs. A few days later, it failed to service a US$78 million coupon on its dollar bonds due in 2023 and 2028, leading S&P Global Ratings to declare a selective default. Sri Lankan dollar notes due in 2029 were down 1.2 per cent to 38.7 cents on the dollar on Monday, after touching an all-time low of 37 cents on the dollar last week, indicative pricing data compiled by Bloomberg showed. The extra yield investors demand to hold the notes over US Treasuries is at 37 percentage points, according to JPMorgan Chase & Co. That's far above the 1,000-basis point threshold to be considered distressed.