SL picks Lazard and Clifford Chance to advise on debt restructuring

• Cabinet nod granted this week to appoint the two entities
• Cabinet Co-Spokesperson Bandula Gunewardane says Lazard quoted Rs.5.6mn for their services for one-year period
• Treasury had received 52 proposals for its RFPs; advisors chosen by committee headed by CB Governor and Treasury Secy

The Cabinet nod has been granted to appoint Bermuda-based Lazard as financial advisor and London-based Clifford Chance LLP as legal advisor to support the country’s external debt restructuring exercise.

President Gotabaya Rajapaksa in his capacity as the acting Minister of Finance sought the approval of the Cabinet Ministers on Monday to appoint Lazard and Clifford Chance as financial and legal advisors for the upcoming debt restructuring process.

According to Cabinet Co-Spokesperson and the Minister of Mass Media Bandula Gunewardane, Lazard has quoted US$ 5.6 million for one-year period for their services. 

The Treasury received 52 proposals from reputed firms in response to Requests for proposals (RFPs) floated back in early April. Although, the bids were originally scheduled to be closed on 16th of April, the submission period was extended by the Treasury.

The advisors were recommended by a committee headed by Treasury Secretary Mahinda Siriwardena and Central Bank (CB) Governor Dr. Nandalal Weerasinghe.

Gunewardane stressed that the evaluation process was conducted in a transparent manner to obtain the services of the most suitable experts to support the country’s debt restructuring exercise.

The financial advisor is tasked with supporting the government in debt management including evaluating the government debt stock and representing the government’s interest during negotiations with creditors and arranging meetings with them.   

 Further, it would also be responsible for designing a mechanism and process to engage with the International Monetary Fund (IMF) to improve medium and long-term debt engagement and reform strategies.
Meanwhile, the legal consultant would advise the government on debt management strategies and execution of such strategies while reviewing legal and regulatory issues on debt management.

Along with the financial advisor, the legal consultant is tasked with representing the government’s interest in negotiations with creditors and arranging meetings. 

Further, the legal consultant is also tasked with formulating strategies for the government in securing development assistance from official development agencies and reaching consensus with private creditors and bilateral official creditors on possible re-profiling of public debt.  

In April, Sri Lanka announced a pre-emptive default on its US$ 51 billion external debt and it defaulted on its debt for the first time in its history last week after it missed an interest payment on an international sovereign bond.