Restructuring Guru Buchheit Warns Sri Lanka on Holdout Creditors
- Some outstanding notes hold problematic single-series CACs
- Committment toward even-handed treatment could smooth talks
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A clause on some of Sri Lanka’s older dollar bonds gives creditors a potential opening to hold the sovereign hostage and stall restructuring negotiations.
That’s a warning from Lee Buchheit, a veteran of over two dozen debt restructurings who has also been consulted by the Sri Lankan government. He reminds some of the nation’s debt contracts contain the so-called single series collective action clause, which could allow a minority of bondholders to veto or demand terms in the negotiations.