CEO Magazine Sri Lanka’s Post

Finally a debt restructuring agreed with SL government finalizing a deal with the Eurobondholders. Another positive news for EM sovereign credit after the deals for Ghana and Zambia. As per Bloomberg, Investors agreed to take a 28% nominal reduction on the bonds’ principal. The deal included the issuance of notes whose payouts are linked to economic growth and a potential governance-linked bond. #emergingmarketdebt #debtrestructuring #distresseddebt #imf #eurobonds

AGREEMENT ON A DEBT RESTRUCTURING BETWEEN THE OFFICIAL CREDITOR COMMITTEE AND SRI LANKA. Since the Official Creditor Committee (OCC) and Sri Lanka agreed on the main parameters of a debt treatment consistent with those of the Extended Fund Facility (EFF) arrangement between Sri Lanka and the IMF on November 23, 2023, the OCC and Sri Lanka furthered discussions in order to finalize the agreement in a Memorandum of Understanding (MoU). #DebtRestructuring #SriLanka #ParisClub

The G20 Common Framework for debt restructuring is loaded in favour of bilateral creditors to the detriment of private creditors. In #Ghana an agreement with bilateral creditors this week leaves private creditors facing a haircut without even a mirror to check. I explore in The Africa Report (Subscribers) https://lnkd.in/edwP-V_T #Africa #sovereigndebt #China

Sri Lanka’s Sovereign Debt Restructuring: A Major Step Forward Sri Lanka has made significant strides in tackling its fiscal challenges by securing in-principle agreements to restructure USD 17.5 billion of sovereign debt with external creditors. Key points: USD 14.2 billion of International Sovereign Bonds (ISBs) restructured with the Ad Hoc Group of Bondholders (AHGB) and the Local Consortium of Sri Lanka (LCSL). An upfront USD 3.2 billion debt reduction, with the potential for further cuts ranging from USD 2.0 billion to USD 4.6 billion based on economic performance. Debt service payments will decrease by USD 9.5 billion over the IMF program period, and bondholders will concede a 40.3% present value under the baseline scenario. Interest rates lowered from 6.4% to 4.4% and bond maturities extended by 5 years. This progress builds momentum for Sri Lanka's fiscal stability, with the IMF and bilateral creditors monitoring further steps. A critical move towards long-term economic recovery. #DebtRestructuring #SriLanka #FiscalReform #EconomicDevelopment #IMF

Sri Lanka, bondholders plan fresh round of debt talks this month Global investors and Sri Lankan officials are gearing up for a fresh round of talks aimed at restructuring $12 billion in defaulted global bonds. Following initial negotiations in Europe without a deal, both parties plan to reconvene later this month, coinciding with the International Monetary Fund's spring meetings in Washington DC. Details of the proposed restructuring remain undisclosed, but securing a deal with private investors is crucial for Sri Lanka's broader plan to overhaul $27 billion of foreign debt. Successful negotiations are vital to maintaining financing from the IMF bailout. While official creditors, including China, India, and the Paris Club, have already reached agreements with the Sri Lankan government, discussions with private bondholders continue. Notably, discussions have included the potential issuance of macro-linked bonds, tying payouts to Sri Lanka's gross domestic product performance. Advisers for bondholders, led by Rothschild & Co., are engaging with the Paris Club to preempt any potential objections, aiming to streamline the restructuring process. ~ Source - Ada Derana, Bloomberg #Bonds #SriLankanDebt

Sri Lanka is much closer than it has been before to entering an agreement with bondholders on the terms of its debt restructuring. Currently, one of the gaps between the bondholder proposals and what Sri Lanka has put forward consists of how the potential upsides of Sri Lanka's GDP growth can be shared. This research note that I co-authored with Nishan de Mel and Shanta Devarajan introduces a novel instrument proposed by Verité Research and for the first time has been included in the most recent negotiations. This novel instrument is a “Governance Linked Bond” that is designed to adjust downwards (coupon step-down) in response to Sri Lanka achieving specific governance targets outlined in the IMF program. This structure not only incentivizes the Sri Lankan government to implement necessary structural reforms by offering a coupon reduction on success, but also aligns the financial interests of the bondholders with the broader macro-economic stability of the country. If this proposal is accepted by Sri Lanka, it could help close the gap and allow debt restructuring to be completed quickly and effectively. https://lnkd.in/gZxg3Kva

One step closer to being able to access capital markets. Some people don’t realize that by declaring bankruptcy in April 2022, this meant the new Government of May 2022 with Prime Minister Wickremesinghe could only raise capital bilaterally and from multilateral lending institutions (not the capital markets). Additionally, some bilateral lenders only wanted to wait till the debt restructuring was completed. Last week on Wednesday (26th June 2024) Sri Lanka reached agreements with our biggest bilateral lenders in the form of the Official Creditor Committee (OCC) and China Exim Bank, which means they can now access bilateral funding again. This week on Wednesday (3rd July 2024) we receive this news and are closer to completing the debt restructuring. In my opinion all credit goes to The Geopolitical Cartographer Founder and Patron, Ranil Wickremesinghe, who took on the role of Prime Minister in May 2022 and President in July 2022, promising the people that he would deliver them from the then-economic crisis and restore stability to Sri Lanka. Credit is also due to President Wickremesinghe’s team, with his Chief of Staff, Sagala Ratnayaka. Here we are, not even 2 years later and, on the verge of this historic recovery. That is how delivery for the people works, not false promises or speculation like many politicians offer. Look at their track records. https://lnkd.in/g-M4anXa

Sri Lanka has reached a final restructuring agreement for $5.8 billion of debt with the Official Creditor Committee of bilateral lenders, led by France, India, and Japan, providing significant debt relief and enabling the allocation of funds to essential public services and development financing. Additionally, Sri Lanka signed bilateral debt treatment agreements with China’s Exim Bank and is continuing negotiations with bondholders and the China Development Bank to finalize its debt restructuring. Progress in these negotiations is crucial for maintaining the flow of funding from the International Monetary Fund, which has so far disbursed about a third of a $3 billion bailout, essential for Sri Lanka's economic recovery ahead of the presidential elections expected before mid-October. Source : Bloomberg https://lnkd.in/gnW2NDtz

THIRD AMENDMENTS TO FOREIGN INVESTMENT AND FOREIGN DEBT MANAGEMENT BY-LAWS, 2078 On February 9, 2024, Nepal Rastra Bank (“NRB”), the regulatory authority overseeing banks and financial institutions in Nepal, made amendments to the Foreign Investment and Foreign Debt Management By-laws, 2078 ("By-laws"). The purpose of this Briefing is to highlight significant amendments in the By-laws and is not an exhaustive account of all the changes...... Click on following link to view whole content in this issue https://lnkd.in/dgRSvd-q

Zambia's debt restructuring deal of the Eurobonds... an interesting structure to reissue the debt as two bonds, A and B. In the two treatment scenarios, for the base case, Bond B will be liquidated in three equal instalments, 4 instalments in the upside case. It would be prudent for the government to exploit the amortization profile for Bond B, given the long-term repayment profile, and also that the coupon rates ramp up post the maturity of Bond A.