Bondholders are questioning if President Gotabaya Rajapaksa will name a new prime minister and cabinet this week to try to end political instability
A no petrol sign at a gas station after a nationwide curfew was lifted for a few hours in Colombo, Sri Lanka, on May 12 2022. Picture: BLOOMBERG/BUDDHIKA WEERASINGHE
The country’s debt due in 2029 slumped 4 US cents on Wednesday to be quoted at 37c on the US dollar, the lowest on record, according to indicative pricing data compiled by Bloomberg. Most other Sri Lankan dollar bonds also dipped further into distress after Mahinda Rajapaksa’s resignation as prime minister did little to quell uncertainty.
“We want to see a government that can stay in power,” said Jeff Grills, head of emerging markets debt at Aegon USA Investment Management in Chicago. “Otherwise you can’t restructure.” Technical level discussions between the country and the IMF continue, Masahiro Nozaki, the fund’s mission chief for Sri Lanka, said in a statement on May 10. It’s not clear if there are still negotiations starting this week as planned.
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