Republic of Sri Lanka - News - Ad Hoc Group Restructuring Proposal (inc. Exchange Offer)

Ad Hoc Group of Sri Lanka Bondholders Submits Restructuring Proposal

13 OCTOBER 2023

Full announcement including disclaimers and offer restrictions available via Prnewswire: Source: White & Case LLP

"LONDON and NEW YORK, Oct. 13, 2023 /PRNewswire/ -- The Ad Hoc Group of Bondholders (the "Group") of the Republic of Sri Lanka ("Sri Lanka") has taken note of the progress Sri Lanka has made with its official sector creditors towards reaching an agreement in principle on a debt treatment within the framework of its IMF Programme.

Consistent with the Group's February 3, 2023 statement of financing assurances, and in line with the objectives which have been expressed by official and private sector participants in the Global Sovereign Debt Roundtable to facilitate more efficient and equitable sovereign debt restructuring processes, the Group remains committed to working with the Sri Lankan authorities as quickly as possible to find a sustainable solution to Sri Lanka's debt challenges as they relate to its international bond debt.

To that end, the Group, acting through its Steering Committee, recently proactively submitted its own restructuring proposal relating to Sri Lanka's outstanding international bonds. The proposal, which provides upfront debt relief, includes a menu of new securities that would be offered to the holders of the existing bonds, including a "Macro-Linked Bond" ("MLB").

The MLB is an innovative new instrument that is designed to be liquid and index-eligible and whose payouts are linked to the evolution of Sri Lanka's gross domestic product. This design seeks to ensure both that the instrument is acceptable to bond market participants and that its cash flows will at all times comply with the Debt Sustainability Analysis targets embedded in Sri Lanka's IMF Programme in a range of future macroeconomic scenarios.

The Group believes that its proposal, including the MLB, will contribute to restoring Sri Lanka's debt sustainability and, at the same time, will command broad support from existing holders of Sri Lanka's international bonds.

The terms of the MLB included in the Group's proposal delivered to the Sri Lankan authorities are attached as Annex I and II hereto.

The Group is advised by Rothschild & Co and White & Case LLP, as financial and legal advisors, respectively."

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