Sri Lanka’s bondholders have overwhelmingly approved the government’s $12.55 billion international bond restructuring proposal, marking a significant milestone in the country’s debt overhaul process.
Final results revealed that holders representing 97.86% of the outstanding principal voted in favor of the plan, which replaces the defaulted bonds with a series of innovative fixed-income instruments. This marks an increase from initial results of 96%, as announced earlier.
The restructuring follows Sri Lanka’s historic foreign debt default in May 2022, triggered by a heavy debt burden and dwindling foreign reserves.
The new instruments include governance-linked bonds (GLBs), which offer a 75-basis-point reduction in interest rates if Sri Lanka achieves specific governance targets. Additionally, bonds linked to the country’s economic performance will provide further flexibility based on growth outcomes.
With this agreement, Sri Lanka joins Ghana, Ukraine, and Zambia as the fourth country to finalize a bond restructuring deal in 2024.
Source: Reuters
