Sovereign Analysis /
Sri Lanka

Sri Lanka: Default is inevitable but bonds reach recovery value

  • Default looks increasingly inevitable as external imbalances worsen and policymakers ignore gravity of problem

  • We calculate a “base case” recovery value of US$50-55 and “bearish” value of US$32-36 for the 6.85 03/14/2024s

  • Current price of US$52 is in line with fair value; upgrade to Hold for post-2022 eurobond curve

Sri Lanka: Default is inevitable but bonds reach recovery value
Patrick Curran
Tellimer Research
21 December 2021
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