Sri Lanka's bondholders have approved the government's proposal to restructure $12.55 billion in international bonds, marking a critical milestone in the nation's debt restructuring process.
According to a government statement dated December 16, holders representing 97.86% of the outstanding principal on the existed bonds voted in favor of the plan. This plan includes swapping the defaulted bonds for a series of new fixed-income instruments.
Sri Lanka defaulted on its foreign debt in May 2022 due to its severe economic crisis, characterized by high debt and dwindling foreign exchange reserves. The approval follows initial results released Friday, which showed 96% support for the restructuring plan.
The new instruments include a governance-linked bond offering a 75-basis-point reduction in interest rates if Sri Lanka achieves specific governance targets, along with bonds tied to the country’s economic performance.
With this agreement, Sri Lanka becomes the fourth country in this year to finalize bond restructuring, joining Ghana, Ukraine, and Zambia.
The restructuring is a critical step toward restoring financial stability and meeting commitments to international creditors.
