BlackRock, Ashmore part of Sri Lanka’s creditor group ahead of debt talks

REUTERS: Asset managers Blackrock Inc. and Ashmore Group PLC are among the top holders of Sri Lanka’s international bonds that form part of a creditor group, as markets prepare for a potential debt restructuring, a source said yesterday.

The bondholder group, which hasn’t been formally announced yet, holds more than 30 percent of the country’s foreign sovereign bonds, the source familiar with the situation told Reuters.

While members so far are mainly real money investors, the group is set to expand and include both hedge funds and secondary market funds in the near future, the source added.

BlackRock and Ashmore did not immediately respond to a request for comment.
A debt restructuring would be the first for the island nation, facing its worst economic crisis in decades. The country’s foreign exchange reserves stand at US $ 2.3 billion, with a US $ 1 billion dollar bond maturing on July 25.
The country holds around US $ 12 billion of outstanding international debt.

The country has struggled to pay for critical imports including fuel, food and medicines.

Sri Lanka announced last month it would seek help from the International Monetary Fund (IMF) to help it solve its worst financial crisis in years.  President Gotabaya Rajapaksa, who is governing the country since 2019 with other family members in top positions, will not resign despite demonstrations and street protests, a government minister said yesterday.

Rajapaksa revoked a state of emergency late on Tuesday after dozens of lawmakers walked out of the ruling coalition, leaving his government in a minority in Parliament.

Sri Lanka’s sovereign dollar bonds dropped more than three cents in the dollar. The 2027 bond slipped 3.44 cents to trade at deeply distressed levels of less than 40 cents in the dollar, according to Tradeweb data.