LONDON (Reuters) – Sri Lanka launched its long-awaited bond swap on Tuesday, a key step to finishing its $12.55 billion debt restructuring and enabling its fragile financial restoration to proceed.

Bondholders have till December 12 to vote in assist of the proposal, which might see them swap present bonds for a set of recent points, together with one the place payout is adjusted in line with GDP-growth – a so referred to as macro-linked bond.

The island nation defaulted on its international debt for the primary time ever in Might 2022, buckling beneath a excessive debt burden and dwindling international alternate reserves.

The deal, which the then-government agreed with bondholders simply two days earlier than a September election, will – as soon as accepted – cut back the federal government’s debt service funds by $9.5 billion over the interval of the IMF programme, the federal government mentioned in an announcement.

“At the moment’s official announcement of the graduation of the Worldwide Sovereign Bond restructuring with personal collectors marks an necessary milestone for Sri Lanka,” President Anura Kumara Dissanayake mentioned within the assertion.

The nation’s bonds had been on a rollercoaster across the election, by which Marxist-leaning Dissanayake sweep to energy on pledges to chop taxes and revisit the IMF programme, stoking fears that he would possibly search to revisit the deal struck with the outgoing authorities. Nevertheless, Dissanayake as a substitute signalled willingness to conclude the deal.