Sri Lanka sued by bondholder in US following historic default
Hamilton Reserve Bank Ltd., which holds more than $250 million of Sri Lanka’s 5.875% International Sovereign Bonds due July 25, filed the suit Tuesday in a New York federal court seeking full payment of principal and interest.
Sri Lanka, an island nation off the southern tip of India, fell into default in May after the expiry of a 30-day grace period for missed interest payments on two of its sovereign bonds. Hamilton Reserve, based in St. Kitts & Nevis, said in the lawsuit that the default is being “orchestrated by officials at the highest levels of government,” including the ruling Rajapaksa family, and accused Sri Lanka of excluding bonds held by domestic banks and other interested parties from an announced debt restructuring.
“As a result, these favored Sri Lankan parties stand to be paid principal and interest in full, while the Bonds -- which are also broadly held by US retirement systems including Fidelity Investments, BlackRock, T. Sri Lanka hired Lazard Ltd. and Clifford Chance LLP in May to serve as financial and legal advisors on debt restructuring as the country seeks a bailout from the International Monetary Fund.