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‘I’m a bit flabbergasted… They are bankrupt’ – Sri Lanka on the brink of default

Investors in Sri Lanka are bracing themselves for Colombo to default on bond repayments, reports the Financial Times today, as experts warn that the crisis on the island looks set to worsen.

The FT reports that Sri Lanka owes US$15bn in bonds out of a total of US$45bn long-term debt, with US$7bn due this year in interest and debt repayments.

“They are demonstrating an amazing willingness to pay,” said Richard House, head of emerging market debt at Allianz Global Investors.

 “But why they would want to, I’m a bit flabbergasted. They are bankrupt, pretty much… They are wasting precious FX reserves. It’s just delaying the inevitable.”

“At these levels, a restructuring over the next 12 months should be the base-case scenario,” Polina Kurdyavko, head of emerging market debt at BlueBay Asset Management, told the FT. “I find it difficult to see them muddling through this year.”

Read more from the FT here.
 

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