The Local Consortium of Sri Lanka (LCSL), comprising domestic commercial banks and financial institutions, announced on Monday its full support for the government’s US$ 12.55 billion International Sovereign Bond (ISB) restructuring plan, which includes a “local option” tailored for domestic holders.

The commitment follows the agreement-in-principle reached in September 2024 with the government on key financial terms. The LCSL said all its members intend to participate in the ISB restructuring, which aims to deliver substantial debt relief to the government.

“This will be in addition to the support provided to the government and wider economy since the foreign currency default in April 2022,” the LCSL said in a statement.

The restructuring is expected to resolve Sri Lanka’s sovereign debt default, support macroeconomic stabilisation, and ensure debt sustainability under the country’s International Monetary Fund (IMF) programme.

The LCSL and the Ad Hoc Group of Sri Lanka Bondholders, representing international ISB holders, collaborated to reach a comprehensive solution for the country’s debt crisis. Together, members of both groups hold over 50 percent of Sri Lanka’s outstanding ISBs.

The ‘local option’ provides ISB holders the opportunity to exchange existing claims for new instruments denominated in both Sri Lankan rupees and U.S. dollars.

“Curing the default on Sri Lanka’s ISBs will facilitate the restoration of external market access and is a crucial step forward, not only for the government but also for LCSL members in maintaining their ability to finance the country’s economic recovery,” it said.

Chairman of the LCSL and CEO of Commercial Bank of Ceylon Sanath Manatunge said the restructuring will help restore macroeconomic stability and encourage investment in the local economy to the benefit of the people of Sri Lanka. 

“Members of the LCSL fully appreciate and recognise their responsibility to finance the economic recovery and look forward to fulfilling this role,” he said.

The LCSL, advised by Newstate Partners LLP and Baker & McKenzie Wong & Leow, includes 11 local banks and financial institutions that hold approximately 12 percent of Sri Lanka’s outstanding ISBs. Members include Commercial Bank of Ceylon PLC, DFCC Bank PLC, Hatton National Bank PLC, National Development Bank PLC, Nations Trust Bank PLC, Pan Asia Banking Corporation PLC, Seylan Bank PLC, LOLC Finance PLC, LOLC Financial Sector Holdings (Private) Limited, and Softlogic Life Insurance PLC.