SL briefs bondholders on US $ 7.6bn restructured debt in global investor call

The Finance, Planning and Economic Development Ministry concluded a formal briefing yesterday for the international investors, marking a key milestone in the country’s post-restructuring financial transparency.

The investor call focused on the Debt Report published on December 31, 2025, providing a platform for the government to discuss the recent fiscal and economic developments. 

The session was specifically tailored for the holders of Sri Lanka’s new ‘Step-Up’ bond series, which were issued as part of the country’s comprehensive debt exchange.

Central to the discussion were five series of international bonds, totalling approximately US $ 7.66 billion. These instruments are categorised into two innovative types: Macro-Linked Bonds (MLBs) and Governance-Linked Bonds (GLBs).

The MLB comprises four series, totalling US $ 6.22 billion. These bonds feature ‘step-up’ mechanisms, where the interest rates or principal repayments adjust based on the performance of the Sri Lankan economy. 

According to the reports from the ministry and International Monetary Fund, if the country’s average GDP exceeds US $ 107 billion and real GDP growth surpasses 11.5 percent cumulatively by 2027, the interest rates for these series will reset higher. 

Conversely, if the growth falls below the US $ 94 billion threshold, the government receives a further “downside” principal haircut of up to US $ 1.6 billion, providing a built-in safety net.

Meanwhile, the GLB consists of a single series of US $ 1.44 billion that incorporates incentives tied to the country’s progress in governance and policy reform. This bond includes a 75-basis-point interest rate reduction, if the government meets two key performance indicators by 2028: lifting government revenue to at least 15 percent of GDP in 2026 and 2027 and the consistent publication of Fiscal Strategy Statements and Debt Reports, as mandated by Public Financial Management Act No. 44 of 2024.

The government officials utilised the call to clarify how the data in the year-end Debt Report impacts these specific instruments, ensuring that the global financial community remains aligned with Sri Lanka’s current fiscal trajectory.

"Sri Lanka is on track to achieve all IMF debt sustainability targets, even assuming the first threshold of the variable MLBs is triggered. Debt indicators have continued improving relative to previous IMF reviews due to improved macroeconomic conditions," Treasury Secretary Dr. Harshana Suriyapperuma told the ISB holders via investor call. Sri Lanka’s gross official reserves reached US $ 6.8 billion at end-2025, the highest level since the 2022 crisis. This buildup of foreign exchange is crucial, as it stabilises the rupee and ensures the country can meet its primary debt service obligations, estimated at US $ 3 billion to US $ 4 billion annually, post-restructuring.