ECONOMYHNEXT – ri Lanka has urged all bondholders to take part in a bond exchange launched on November 26, with a deadline of December 12 where 12.55 billion in defaulted bonds are exchanged for new ones along with past due interest.
“I urge private sector creditors to participate in the debt restructuring process to provide essential relief, thereby laying the groundwork for a brighter future for Sri Lanka and its people,” President Anura Dissanayake said in a statement.
Download SriLanka bond exchange statement
Hamilton Reserve, a holder of 25 percent of defaulted bonds which matured on 2022 had gone to court had gone to court seeking full payment.
Sri Lanka advisors are separately looking at the issue.
“A risk there but according to the legal advisors it can be mitigated,” Deputy Finance Minister Anil Jayantha Fernando told reporters.
“According their advice we strongly believe we can come to an amicable solution.”
There was also a consent fee, he said.
There was a risk in continuing to litigate and Hamilton Reserve could also consider the trade-off involved.
They hold a so-called ‘single series’ or non-aggregated collective action clause (CAC) bond where a 25 percent holder can litigate. In aggregated CAC bonds the entire series is considered together.
Court proceedings were stayed at Sri Lanka’s request pending the restructure.
Sri Lanka is offering to bonds where the initial haircut would reduce if the country’s GDP grows father than projected by the International Monetary Fund.
A committee of bondholders who negotiated with Sri Lanka also urged all other private investors to take up the offer. The offer closes on December 12.
“The Steering Committee encourages all holders of Sri Lanka’s international bonds to review the documentation published by Sri Lanka today, note the respective instructions and deadlines embedded in the Invitation, and participate in the exchange as early as possible,” they said in a statement.
Sri Lanka defaulted after multiple currency crises triggered by money printed through direct and open market operations to target potential output and inflation as high as 5 percent a year in a country without a war.
Click here for more details of the exchange offer.
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