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India has given “lot of offers” for Ramayana Trail, Sri Lanka state minister says
ECONOMYNEXT – Sri Lanka offered a revised restructuring proposal to sovereign bond holders sources said, as the country tries to wrap up debt restructuring by the middle of the year and a holdout investor sues to force payment on one series of bonds.
A US court had stayed proceedings of case by holdout investor Hamilton Reserve for six months, which has the required volumes of bond with a ‘single series’ collective action clause to file action following request which was supported by the US, UK and France.
The deadline runs out on February 29.
An extension of at least three months may be sought to help wrap up the debt restructuring, sources said.
Sri Lanka is expecting to sign memoranda of understanding with Paris Club, within weeks, according to official sources.
Courts had earlier granted the stay saying Hamilton had the option of renewing case for summary judgement once it is lifted.
Sri Lanka rejected a proposal by bondholders to exchange a ‘downside’ bond linked to gross domestic product which will have a 20 percent hair cut with additional haircuts if GDP growth is low as forecasted by the International Monetary Fund.
Bondholders believe that the growth projections in an IMF debt sustainable analysis is too pessimistic
However bondholders are very keen on the structure, and it may be tough to convince them to accept a ‘plain vanilla’ type of solution, according to sources familiar with their thinking.
Bondholders also do not want a value recovery instrument detached from the underlying bond which is not ‘index eligible’. Earlier VRI’s used in debt re-structures have been upside instruments.
Bondholders had earlier expressed their unhappiness at what they said was “no progress” in negotiations.
Some bondholders were also of the view that the first ask by Sri Lanka from bondholders was deeper than the in-principle re-structure given by bilateral creditors. (Colombo/Feb22/2024)
A US court had stayed proceedings of case by holdout investor Hamilton Reserve for six months, which has the required volumes of bond with a ‘single series’ collective action clause to file action following a request from the US government among others.
The deadline runs out at the end of the month.
An extension of at least three months may be sought to help wrap up the bond restructuring, sources said. It is not clear whether courts will grant the extension.
Sri Lanka rejected a proposal by bondholders to exchange a ‘downside’ bond linked to gross domestic product which will have a 20 percent hair cut with additional haircuts if GDP growth is low as forecasted by the International Monetary Fund.
Bondholders believe that the growth projections in an IMF debt sustainable analysis is too pessimistic
However bondholders are very keen on the structure, and it may be tough to convince them to accept a ‘plain vanilla’ type of solution, according to sources familiar with their thinking.
Bondholders also do not want a value recovery instrument detached from the underlying bond which is not ‘index eligible’. Earlier VRI’s used in debt re-structures have been upside instruments.
Bondholders had earlier expressed their unhappiness at what they said was “no progress” in negotiations.
Some bondholders were also of the view that the first ask by Sri Lanka from bondholders was deeper than the in-principle re-structure given by bilateral creditors. (Colombo/Feb22/2024)
