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Sri Lanka Proposes New Debt Restructuring Plan to Dollar Bondholders Amid Ongoing Overhaul

Sri Lanka has reportedly submitted a fresh restructuring proposal to its dollar bondholders with the assistance of advisory firm Lazard, as part of the nation’s ongoing efforts to finalize the restructuring of its defaulted debt, as per sources familiar with the situation.

Sources, who opted to remain anonymous due to the confidential nature of the negotiations, revealed that the new proposal serves as a counteroffer to a bondholder group’s previous proposition in October. The group had suggested a 20% haircut and the issuance of macro-linked bonds. However, specific details of the latest proposal conveyed through Lazard were not disclosed. There are indications that government representatives might soon travel to London to engage with Sri Lanka’s commercial creditors.

The successful completion of the restructuring, addressing the $27 billion foreign debt of Sri Lanka, is crucial for securing continued financing from the International Monetary Fund (IMF) bailout. President Ranil Wickremesinghe stated earlier this month that authorities anticipate concluding the restructuring within the initial six months of the year.

Efforts to obtain comments from Sri Lanka’s treasury secretary, junior finance minister, and central bank governor were unsuccessful. Similarly, representatives from the bondholder group and Lazard were not immediately reachable for comment.

It’s worth noting that the government has already reached restructuring agreements with official creditors, including China, India, and the Paris Club, as well as with holders of its local debt.

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