Sri Lanka bondholders sent $12 billion debt rework proposal to government -sources

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Sri Lanka bondholders sent $12 billion debt rework proposal to government -sources

© Reuters. FILE PHOTO: A general view of city's skyline, amid the country's economic crisis in Colombo, Sri Lanka, April 19, 2022. REUTERS/Dinuka Liyanawatte

The proposal sent on Oct. 2 provides a write-down, or haircut, on both capital and interest, added the sources who declined to be named because the talks are private. The overall proposal includes an option for creditors that combines MLB notes with a regular bond and a second option of regular bonds with a Value Recovery Instrument , one of the sources said.Bonds included in an index generally have more liquidity.

The trigger of the step-down payments on the MLBs would be linked to indicators such as Sri Lanka's gross financing needs to gross domestic product ratio and debt to GDP ratio, one of the sources said.The restructuring proposal is based on parameters from the debt sustainability analysis that the IMF produced when it agreed the programme for the battered economy.

 

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