Sri Lanka Seeks to Restructure $19.8 Billion of Domestic Debt

Sri Lanka is seeking to restructure about $19.8 billion of local bills and bonds as part of its plan to change the terms of its debt load.

(Bloomberg) — Sri Lanka is seeking to restructure about $19.8 billion of local bills and bonds as part of its plan to change the terms of its debt load.

The domestic debt optimization involves about 3.5 trillion rupees ($11.4 billion) of bonds held by retirement funds and 2.6 trillion rupees are bills owned by the central bank, Deputy Treasury Secretary A.K. Seneviratne told reporters in Colombo on Thursday. The rest are dollar denominated bonds mainly held by domestic banks.

Sri Lanka is seeking to restore debt sustainability in line with a $3 billion International Monetary Fund bailout program it secured in March. The South Asian nation’s domestic debt stood at around $38 billion in 2022, while its external borrowings totaled $41 billion, according to the IMF.

The debt plan represents a major step in Sri Lanka’s efforts to set its economy back on track after it defaulted in 2022. Securing an agreement from creditors is crucial for the nation to keep unlocking funding under the IMF bailout.

The nation’s $1.5 billion bond due in 2030 rose 0.2 cents to 40.5 cents on the dollar on Thursday.

–With assistance from Ronojoy Mazumdar.

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