Sri Lanka fails to strike deal with sovereign bondholders for USD 12 billion debt restructuring

COLOMBO: The Sri Lankan government on Tuesday said it failed to reach an agreement with its bondholders for restructuring around USD 12 billion debt, in the latest setback for the cash-strapped island nation which is aiming to meet targets for the next tranche of the IMF bailout.

Sri Lanka aims to complete debt restructuring agreements with private creditors and sovereign bond-holders by June, in time for the next review of the International Monetary Fund (IMF) bailout programme.

The Finance Ministry said that the government held restricted discussions over the past three weeks with nine members of the Ad Hoc Group of Bondholders but could not strike a deal.

“Despite constructive discussions, the parties did not come to an agreement on restructuring terms,” said the statement issued by RMP Ratnayake, Deputy Treasury Secretary.

It said that the government considered two separate proposals sent by the bondholders in March and early this month, while the bondholders rejected the government’s proposal for a 28 per cent haircut.

Sri Lanka is “looking forward to continued engagement in good faith as soon as feasible, to reach common ground in the next few weeks, ahead of the second review of the IMF-Supported Programme being considered by the IMF Executive Board,” it said.