Labour Minister and Economic Development Deputy Minister Prof. Anil Jayantha Fernando yesterday announced that the Cabinet of Ministers has approved the Launch of International Sovereign Bonds Exchange.
He further said that Cabinet approved the proposal to issue new bonds in place of the previous bonds. Finance Ministry in a release yesterday said that the launch of International Sovereign Bonds Exchange follows the approval of the terms and conditions of the invitation by the new Cabinet of Ministers of Sri Lanka, which was formed on 18 November 2024.
The Ministry added that the successful completion of the bond exchange will enable Sri Lanka to achieve sovereign debt sustainability and accelerate the country’s economic recovery.
“Under the baseline scenario, Sri Lanka will achieve approximately USD 95 billion debt service payments reduction over the 4-years’ IMF program period, 31% reduction in the coupon rate of Sri Lanka’s Bounds to 4.4%, and extension of the average maturity profile of over 5 years. “, the statement said.
Excerpts from the release : Holders of the existing Bonds are invited to tender their bonds and exchange them for new instruments over a three week period, with the final deadline set for 12 December 2024. Relevant information for holders is available at the Invitation website (https//projects.sodali.com/srilanka), subject to eligibility confirmation and registration.
Questions and requests for assistance in connection with the Invitation, the Proposed Modifications, the Consent Solicitations and the Exchanges should be directed to the Dealer Manager. Questions regarding the procedures for participating the invitations (including questions in relation to settlement) and the submission of Consent Instructions and Tender Orders should be directed to the Information, tabulation and Exchange Agent. The contact details for each are on the next page of this announcement.
Sri Lanka strongly encourages all holders to participate in the exchange process as early as possible. The features of the new instruments have been meticulously discussed for over two years with holders in good faith ensuring the best possible outcome for all parties. An agreement in principle was reached on 19 September 2024 with two representative groups of holders- one comprising international investors and the other domestic financial institutions- together holding over 50 of the outstanding Bonds. Additionally, the IMF and Sri Lanka’s Official Creditor Committee have both confirmed that the proposed features of the new instruments are compatible with the parameters of Sri Lanka’s IMF supported programme and the Comparability of Treatment principle respectively.
The successful completion of the bond exchange will enable Sri Lanka to achieve sovereign debt sustainability and accelerate the country’s economic recovery. Under the baseline scenario, Sri Lanka will achieve approximately US$ 95 billion debt service payments reduction over the four-years IMF programme period, 31% reduction in the coupon rate of Sri Lanka’s Bonds to 4.4%, and extension of the average maturity profile of over five years. The successful completion of the bond exchange will also normalise relations with bondholders.
President Anura Kumara Dissanayake as Finance, Planning and Economic Development Minister said:“Today’s official announcement of the commencement of the International Sovereign Bond restructuring with private creditors marks an important milestone for Sri Lanka. We extend our gratitude to our external creditors, the IMF and the Official Creditor Committee for the good faith negotiations that have enabled us to reach this point. With the successful achievement of Staff Level Agreement on the third review of our IMF supported programme last November 22, I urge private sector creditors to participate in the debt restructuring process to provide essential relief, thereby laying the ground work for a brighter future for Sri Lanka and the people”.
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