SriLankan Airlines’ bond exchange clears with 97% approval

• Transaction delivers a 16% haircut on outstanding claims

Sri Lanka has moved a step closer to closing a critical chapter in its external debt restructuring, with the national carrier securing near-unanimous creditor backing for its long-delayed bond workout, in a deal that signals both fiscal discipline and renewed investor alignment.

SriLankan Airlines and the government yesterday announced the successful completion of the consent solicitation, exchange and tender offer tied to the airline’s US $ 175 million government-guaranteed bonds that matured in June 2024, drawing participation exceeding 99 percent of outstanding holders. 

More than 97 percent of bondholders voted in favour of the transaction, effectively ensuring full take-up and paving the way for settlement.

The restructuring, launched on February 20, follows an agreement in principle reached in November last year, with an ad hoc group representing a majority of bondholders. Under the terms, the investors will exchange their holdings for a combination of cash and new US dollar-denominated 4.00 percent amortising PDI bonds due in 2028, issued by the government.

Chairman Sarath Ganegoda said the outcome reflects strong creditor confidence, with the transaction delivering a 16 percent haircut on the outstanding claims while restoring the airline’s financial footing. He noted that the completion of the deal allows the carrier to shift focus towards operational recovery and longer-term sustainability, positioning it to better support the broader economy.

Treasury Secretary Dr. Harshana Suriyapperuma framed the development within the wider sovereign restructuring effort, noting that Sri Lanka has now concluded agreements covering 99 percent of its public external debt. He said the milestone is expected to help normalise relations with the external partners and strengthen the country’s case for an improved credit rating, as it seeks to regain market access.

The settlement of the transaction was scheduled for March 20, subject to final conditions.

This marks one of the last remaining pieces in Sri Lanka’s complex debt restructuring programme.

source: Daily Mirror