- Bonds surge 29% in 2024, defying initial expectations
- Successful debt restructuring boosts investor confidence
Sri Lankan dollar bonds provided a return of 29% to investors in 2024 amidst debt restructuring, and positioned itself as a top performer among the emerging market sovereign debt, according to Bloomberg market data.
Accordingly, Sri Lanka’s international sovereign bonds (ISBs) have become an unexpected success this year, delivering an impressive 29% return as of the end of November.
According to Bloomberg market data, the dollar bonds that dipped below 50 cents per dollar in September, have managed to climb to 65 cents per dollar by the end of November.
Bloomberg said that the nation’s dollar bonds saw the biggest gains among emerging market peers last Thursday (28) as the 2025 dollar note rose 1 cent on the dollar, for the best performance on the Bloomberg EM Sovereign Total Return Index.
Sri Lanka’s government has already announced the debt exchange for the defaulted dollar bonds and issued new bonds for which the deadline is set at 12 December.
The government reached an agreement in principle in September with two representative groups of holders - one comprising international investors and the other domestic financial institutions - together holding over 50% of the outstanding bonds.
Additionally, the IMF and Sri Lanka’s official creditor committee have both confirmed that the proposed features of the new instruments are compatible with the parameters of Sri Lanka’s IMF-supported programme and the ‘comparability of treatment’ principle respectively.
Meanwhile, the Central Bank of Sri Lanka is confident there will be close to 100% participation in the debt exchange based on historical data globally and as there are sufficient incentives for the bondholders to participate in the process.
“There are certain thresholds, we are very positive that all the thresholds will be met by the end of this period,” the Central Bank chief said.
He added there are options for the Sri Lankan authorities to extend the participation for a further period if there is insufficient participation.