ECONOMYNEXT – Sri Lanka’s deadline for sovereign bondholders to accept set at December 12 has passed with authorities earlier saying the investors had ample incentives to accept the offer.
Sri Lanka officials have said they could give more time if some bondholders require it.
Related
Sri Lanka bondholders have sufficient incentives to join exchange: CB Governor
Sri Lanka sets December 12 deadline to exchange defaulted bonds
Sri Lanka exchange bonds provisionally rated (Caa1), sovereign on upgrade watch: Moody’s
Sri Lanka is attempting to exchange 12.5 billion worth defaulted bonds and past due interest with new bonds including a set of ‘macro-linked’ bonds where the payout is tied to economic growth.
There are 11 bonds sovereign bonds with the later issues under a so-called ‘aggregated collective action clause’.
Such bonds usually require a 66.6 percent ‘super majority’ collectively to carry out an exchange, according to analysts.
There are also several single series CAC bonds issued earlier which holdout investors could block more easily.
Such bonds could require 75 percent acceptance individually allowing investors with a little more than 25 percent to block an exchange.
Hamilton Reserve, an investment bank has gone to court seeking full payment claiming they have 25 percent of a single series bond that matured in 2022. The bond was issued in 2012 before aggregate CAC clauses came into use.
Sri Lanka has obtained a stay order on the proceedings, which was subsequently extended, saying negotiations with other creditors are ongoing for an exchange offer.
The stay order has been described by some legal analysts as a de facto bankruptcy stay which would have implications for future default workouts.
It is not clear whether Hamilton will accept the offer. (Colombo/Dec13/2024)