Oct 31, 2020

No end to debt tail of Sri Lanka : Morgan Stanley   

Influential global investment bank Morgan Stanley recently said a key weakness for Sri Lanka is the high proportion of short-term debt.

"The proportion of short-term debt (original maturity) has increased sharply in the domestic markets and, even on the external side, Sri Lanka now faces a eurobond redemption every year until 2030 with a couple of maturities due in 2022 and 2024-25," the investment bank said in its latest report.

It further stated that the debt-maturity profile would indicate that, in a ‘tail risk restructuring scenario’, re-profiling of debt would be important to ensure that the gross financing requirements over the following years are covered.

"Considering the ownership by EPF and the commercial banks, rollover of domestic debt should not face any issues. However, on the external side, an extension of maturities by at least five years would be desirable looking at the maturity profile.” it added.