As part of its debt restructuring process for defaulted International Sovereign Bonds (ISBs), Sri Lanka has repaid local bondholders with floating-rate rupee bonds. The bonds, maturing between March 2023 and September 2043, were issued following the completion of the ISB restructuring on December 20.
The Central Bank of Sri Lanka (CBSL) announced the issuance of eight tranches of bonds amounting to Rs. 19.46 billion each, with a total value of Rs. 155.7 billion.
Relief for Local Banks
Local bondholders, predominantly banks grappling with increased bad loans and strained capital, did not experience any reduction in principal amounts. According to the CBSL, this measure was aimed at mitigating further financial strain on domestic creditors.
Floating Coupon Rates
The bonds carry a floating coupon rate set at 50 basis points above the CBSL’s Standing Lending Facility (SLF) rate. The SLF rate used for the calculation will be a six-month historical average determined 30 days before each interest payment date.
This move underscores Sri Lanka’s efforts to stabilize its financial sector while navigating the challenges of economic recovery and debt management.
