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Sri Lanka Creditors Seek Clarity on Local Bonds for Debt Talks

  • Local bonds amount to half of country’s $70 billion debt pile
  • Sri Lanka seeks to restructure foreign debt, repay local bonds
A customer receives Sri Lankan rupee banknotes in Colombo, Sri Lanka.

A customer receives Sri Lankan rupee banknotes in Colombo, Sri Lanka.

Photographer: Buddhika Weerasinghe/Bloomberg

Holders of Sri Lanka’s foreign bonds want more clarity on the nation’s local-currency debt before they sit down for formal restructuring talks, according to people familiar with the situation.

Creditors are concerned that managing Sri Lanka’s local debt pile will prove costly, which could reduce payments earmarked for foreign bondholders or even trigger another restructuring effort down the road, said the people, who asked not to be identified because the discussions are private. The Asian island nation seeks to restructure its Eurobonds while repaying its local-currency obligations in full.