Giant asset manager Fidelity and T. Rowe Price will likely face the biggest hits in a Sri Lanka debt default.
The largest overseas holders of Sri Lanka’s around US$12.6 billion in foreign debt were Fidelity Investment parent FMR, Lord Abbett & Co. and T. Rowe Price Group, according to a «Bloomberg» report Thursday, which cited in-house data. FMR holds $114.3 million of the debt, Lord Abbett had $78 million and T Rowe held $32.6 million, the data showed, according to the report.
Sri Lanka’s next hurdle will be 18 April, when it faces a $36 million interest payment on a bond maturing in 2023 and a $42.2 million payment on a 2028 bond, the report said. Around $1.03 billion in principal and interest is due on 25 July, the report said.
Beyond Distressed
The report cited data showing Sri Lanka’s sovereign bonds are paying around 30 percentage points higher yield than U.S. Treasurys, compared with a 10-percentage point level for being considered distressed debt.
Sri Lanka has been plunged into an economic crisis after a foreign borrowing spree, followed by a series of hits, such as natural disasters and a ban on chemical fertilizers. The country is embroiled in a series of sometimes violent protests against the government as basic supplies, such as food, electricity and medicine, are running low due to a lack of foreign currency available to pay for imports, according to media reports.
The government itself is in turmoil after the entire cabinet quit, with around 26 ministers stepping down, and the central bank governor resigned. The new central bank governor is set to hold a policy meeting Friday, after taking office Thursday, «Reuters» reported. The government is still seeking a finance minister after its initial pick quit a day after being appointed; the finance minister had been scheduled to meet with the International Monetary Fund (IMF) for loans.
