Government of Sri Lanka Issues Notice for RfPs to Appoint Dealer/Manager for ISB Exchange Offer
In a significant move towards the restructuring of a substantial portion of its external commercial debt, the Treasury has announced the initiation of a possible US dollar-denominated International Sovereign Bonds (ISBs) exchange offer. The announcement includes the issuance of a notice for Request for Proposals (RfPs) from interested parties to serve as dealer cum manager for the exchange of Sri Lanka’s existing ISBs denominated in US dollars for new ISBs in the same currency.
The Ministry of Finance, Economic Stabilisation, and National Policies has termed this initiative as the “Potential International Sovereign Bonds Exchange Offer” by the Government of Sri Lanka. As part of the restructuring process, the Government aims to launch an invitation to exchange its outstanding ISBs, valued at $12.1 billion, out of a total identified external debt worth $22 billion for restructuring.
Banks are invited to submit proposals for consideration to be appointed as Dealer Managers for the proposed Exchange Offer. These selected entities will collaborate with Sri Lanka’s designated financial and legal advisors, Lazard Frères SAS and Clifford Chance LLP, in facilitating the exchange process.
This strategic move coincides with ongoing negotiations in London between Treasury and Central Bank officials and commercial creditors, including ISB holders. The scope of work for the appointed Dealer Managers encompasses various tasks such as preparing the Exchange Offer, coordinating with relevant stakeholders, assisting in the design of the Exchange Offer strategy, and monitoring market conditions.
Bidders will be evaluated based on the strength of their technical and financial proposals, as well as their past experience in similar roles in sovereign bond exchange offers. The proposal has garnered attention internationally, with experts suggesting that it could pave the way for Sri Lanka to secure additional international financial aid.
According to a Bloomberg report, this step is seen as a positive indication towards a potential deal for Sri Lanka. Sovereign distressed debt exchanges have become increasingly prevalent, especially among emerging economies grappling with economic challenges exacerbated by the pandemic. While such exchanges typically involve local-currency debt, Sri Lanka’s move to address its international bonds reflects a proactive approach in managing its financial obligations. Source – www.ft.lk
Treasury Secretary Mahinda Siriwardena
CBSL Governor Dr. Nandalal Weerasinghe
