(Feb 3): A creditor group of Sri Lanka’s dollar bondholders has written to the International Monetary Fund (IMF) expressing their willingness to engage in quick debt restructuring talks with the island nation.
The bondholders are “ready to engage quickly and effectively with the Sri Lankan authorities to design and implement restructuring terms that would help Sri Lanka restore debt sustainability and allow the country to re-gain access to the international capital markets”, the letter said.
The letter was confirmed with a bondholder, who asked not to be identified because they didn’t have permission to speak publicly.
The CSE All-Share index advanced as much as 1.9% to its highest in nearly four months. A Sri Lankan dollar bond maturing in 2030 also gained.
The letter adds momentum to Sri Lanka’s efforts to secure financing assurances from creditors in order to unlock US$2.9 billion in IMF funding, which it hopes to achieve this quarter. India has already written to the IMF with financing assurances, while members of the Paris Club have said they formally support debt restructuring, according to people familiar with the matter.
The self-described “Ad Hoc Group of Sri Lanka Bondholders” are seeking to reorganise the government’s domestic debt “in a manner that both ensures debt sustainability and safeguards financial stability”, according to the letter.
The group seeks an opportunity to express its views on the economic assumptions underpinning IMF programme targets and the “adequacy and feasibility of the adjustment efforts”.
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