SriLankan Airlines Reaches Bond Restructuring Deal
SriLankan Airlines, in a filing submitted to the Singapore Exchange (SGX) yesterday,confirmed it has reached a final agreement in principle to restructure its USD 175 million in defaulted bonds. This development is expected to mark the completion of Sri Lanka's three-year external debt restructuring effort and may pave the way for a sovereign credit rating upgrade.In an official announcement made by the Singapore Stock Exchange, SriLankan Airlines announced a final agreement in principle to restructure USD 175 million in defaulted bonds. According to the official statement, SriLankan Airlines and the Government of Sri Lanka announced that the Company held restricted discussions between 23 October and 19 November 2025 with six members of the Ad Hoc Group of Bondholders, relating to its US$ 175 Million Guaranteed Bonds due June 2024. The statement further said "The Government and the Company are pleased to report that they have reached agreement in principle with the Group on the financial parameters of the restructuring of the Notes. The in-principle agreed terms remain subject to final approval from Sri Lanka's Cabinet of Ministers as well as the non-objection from the International Monetary Fund and Sri Lanka's Official Creditor Committee, pursuant to the Government's commitments taken in the context of Sri Lanka's overall public debt restructuring exercise."The statement, filed by the Singapore Stock Exchange yesterday added "Under the in-principle agreed terms, and subject to the successful implementation of the restructuring in accordance with such terms, the Government will be discharged from its liability pursuant to the guarantee and benefit from substantial debt and immediate liquidity relief to maintain the hard-fought long-term sustainability of its public finances. The agreement in principle includes a haircut of 15% of the total claim amount pertaining to the Notes while the balance will be exchanged for a mix of cash and medium-term bonds issued by the Government at an interest rate of 4%. "The agreement settles one of the last major obstacles to rebuilding Sri Lanka's financial stability after its 2022 default. With this deal, the government has covered about 99% of its external debt, putting the country in a strong position for a possible credit rating review.
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