Business
Sri Lanka bondholders brace for big losses in debt restructuring
Sri Lanka’s creditors face losing a third to half of their investment in the country’s dollar bonds, after the government announced it would restructure $11 billion worth of debt, the first such financial shake-up in its modern history, according to a report issued by Reuters.
The report further said:
“Formal debt talks haven’t started but analysts are already crunching the numbers to estimate what kind of haircuts could be inflicted on bondholders.”
“Mired in economic crisis, Sri Lanka has halted all external debt payments and is prioritising its remaining hard currency reserves to buy food and fuel”.
“The country of 22 million has been hit by nationwide street protests and shortages of everything from power to medicines, and its dollar bonds trade at deeply distressed levels of around 40 cents in the dollar.”
“With markets factoring in an International Monetary Fund (IMF) loan programme as part of the debt overhaul, a $1 billion bond maturing on July 25th is valued at around 45 cents to the dollar, Refinitiv data showed.”
“Meanwhile, Citi projects that across the bonds maturing between 2022 and 2030, Sri Lanka may seek a coupon haircut of around 50%, a reduction of at least 20% in face value and maturity extensions between 10-13 years.”
“Assuming an 11% exit yield, we estimate that the recovery value on the dollar bonds in such a scenario could range in the low to mid 40s,” Citi strategist Donato Guarino said, referring to the interest rate at which the new securities will trade on the day of the debt exchange.”
“Step-up coupons – interest payments that increase over time – could also play a role “to give the government more time to recover” after the restructuring, Guarino added, noting these were used in Ecuadorean and Argentine debt restructurings.”
“Tellimer analysts assumed in their base case scenario a 30% haircut. They assign a recovery value near 60 cents on the dollar for the bonds, with a 8% exit yield.”
“They also flagged an alternative scenario with a 42-cent recovery value and a 16% exit yield.”
“Tellimer senior economist Patrick Curran considers a 50% haircut a “worst case” scenario, with a recovery value as low as 30 cents for a 16% exit yield.”
“He highlighted the possibility that the debt overhaul might not be as swift as hoped.”
“While bondholders will receive some downside protection if negotiations drag out if interest is capitalised, prolonged delays will also make for a more onerous starting point and political risk will raise exit yields, potentially eroding recovery values,” they added.
“Ratings agency S&P Global has said debt talks could be complicated and take “many months” to complete.”
“On Wednesday, it lowered Sri Lanka’s foreign currency rating to “CC” from “CCC” – two notches above the level denoting default – while Fitch cut its rating to “C” from “CC”.
“JPMorgan analysts say the debt servicing moratorium is expected to pave the way for an IMF programme but warn a restructuring might be “more comprehensive” than what has been announced.”
“As of now, the debt service suspension only covers about 55% of public debt, Citi calculates, noting the latest IMF report hints at a “tough programme ahead.”
“The fund recommends tax reforms, and possibly, curbs on public-sector wages and capital expenditure.”
“Asset managers BlackRock and Ashmore are among the top holders of Sri Lanka’s international bonds. They are part of a fledgling creditor group, with White & Case acting as legal adviser.
Bondholders are in wait and see mode until the government picks a financial adviser, one creditor said, speaking on condition of anonymity.” Reuters report said.
Business
Cost-effective clearance of goods across borders to determine worth of Customs Paperless Declaration
By Ifham Nizam
The introduction of the Customs Paperless Declaration from October 1 could mark an important step in Sri Lanka’s efforts to modernise trade, but its real value will depend on whether it reduces the time and cost of moving goods through the country’s borders, Customs House Agents & Traders Association President Mohamed Niyas said.
Niyas warned that digitising Customs declarations alone would not necessarily translate into faster cargo clearance or lower costs for businesses.
‘Expecting a dramatic improvement in clearance speed under the present conditions is like expecting Ferrari performance from a Morris Minor configuration, he said.
For importers and exporters, the issue extends well beyond paperwork. Every additional hour or day that cargo remains in the clearance chain can have wider consequences for businesses, including increased port and storage-related costs, additional working-capital requirements, uncertainty over delivery schedules and disruptions to production and distribution.
Niyas said the competitiveness of Sri Lanka’s trading sector ultimately depended on how efficiently goods could move through the country’s border-clearance system.
‘The real bottleneck is not merely the absence of paper. It is the entire clearance ecosystem—the limitations of the existing ASYCUDA World system, excessive regulatory interventions by Other
Government Agencies, multiple approvals, physical examinations, manual interventions, fragmented processes and institutional constraints, he said.
He cautioned that unless these bottlenecks were addressed, there was a risk that the paperless initiative would merely digitise existing bureaucracy.
‘If these underlying constraints remain unchanged, there is a real risk that the new paperless system could become another “copy-and-paste road show”—where an old, complex clearance process is simply transferred onto a digital screen without fundamentally changing the process itself, Niyas said.
For businesses dependent on imported raw materials, machinery, components and other inputs, clearance efficiency can directly affect the wider supply chain.
Delays at the border can create uncertainty for manufacturers, distributors and retailers, while exporters can face difficulties meeting delivery schedules when imported inputs or export consignments are held up.
Niyas therefore argued that the success of the October 1 initiative should be judged by its impact on trade flows rather than by the number of declarations processed electronically.
‘Paperless does not automatically mean faster, he said. ‘Digitising a slow process does not make the process fast. It only makes the slow process digital.’
He said Sri Lanka needed to move towards what he described as “process-less Customs”—a system in which unnecessary procedures are eliminated rather than simply converted into electronic procedures.
Among the reforms he called for are simplification of Customs declarations and approval workflows, improvements to the functionality of ASYCUDA World, greater use of risk-based inspections and better integration of Other Government Agency approvals.
Niyas also called for the elimination of repetitive document submissions and physical endorsements, greater use of pre-arrival processing, sufficient capacity for digital document uploads and clearly defined service-level timelines for Customs and OGAs.
Business
China backs Sri Lanka’s Non-aligned stance to counter regional pressures
By Sanath Nanayakkare
As global attention has fixed on the high-level diplomatic choreography at the United Nations General Assembly in New York, a subtler, yet profound geopolitical signal was sent from Colombo, yesterday.
In a major address marking the founding anniversary of the People’s Republic of China, newly appointed Chinese Ambassador Wei Huaxiang chose to anchor bilateral relations not just in modern trade or infrastructure, but in a shared respect for Sri Lanka’s legacy of non-aligned independence.
By explicitly invoking Sri Lanka’s foundational role in the 1976 Non-Aligned Summit, Beijing was doing something unexpected in an era defined by fierce great-power rivalry: it was officially validating a small island nation’s right to maintain an independent foreign policy stance.
The Strategic Value of Independence
For decades, nations caught in the crosshairs of major-power competition have faced intense pressure to pick sides. Yet, Ambassador Wei’s embrace of Colombo’s non-aligned tradition signaled a different diplomatic playbook. Instead of demanding alignment, Beijing was framing its partnership as a reliable counterbalance to regional pressures. By honouring Sri Lanka’s diplomatic autonomy, China was effectively reassuring smaller economies that sovereign independence and robust economic cooperation can coexist.
Beyond Ports and Industrial Zones
This diplomatic framing reframed the narrative surrounding major collaborative ventures like the Colombo Port City and Hambantota Port. While foreign analysts often view these projects exclusively through the lens of strategic rivalry, Beijing’s diplomatic messaging tied them back to a historical ethos of solidarity—evoking memories of the 1952 Rubber-Rice Pact.
By marrying economic projects with a stated respect for non-alignment, China is positioning itself as a steadfast stakeholder that respects Sri Lanka’s internal agency during difficult economic and political seasons.
As both nations look toward major milestones in 2027—including the 70th anniversary of diplomatic ties—this nuanced diplomatic move revealed how historic traditions are being leveraged to navigate modern multipolar realities.
For global observers, the takeaway was clear: in the shifting architecture of Asian geopolitics, respecting a nation’s historical neutrality may just be the most effective way to secure a lasting partnership, a diplomatic masterclass that Ambassador Wei Huaxiang executed in style.
Business
Sri Lanka Insurance Life appoints Dr. Sameera Dharmasena Chief Executive Officer
Sri Lanka Insurance Life (SLIC Life), the nation’s largest and strongest Life Insurer, is pleased to announce the appointment of Dr. Sameera Dharmasena as its new Chief Executive Officer, effective 22nd September 2026.
Dr. Dharmasena is a distinguished insurance professional with over 21 years of experience in the Sri Lankan insurance industry, having held senior leadership positions across several leading insurance companies affiliated with some of Sri Lanka’s largest business conglomerates. His extensive career spans both local and multinational insurance environments, bringing together broad industry expertise, strategic leadership and a strong commitment to the advancement of the insurance profession.
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