Sri Lanka: Upgrade to Buy as bonds drop to 25 cents on the dollar

  • Eurobonds have dropped to mid-July lows of cUS$25 amid risk-off environment and expectations of difficult restructuring

  • At lower end of previous recovery value assumption of US$24-40 for '30s, with bonds pricing in a punitive restructuring

  • Notwithstanding likelihood of messy restructuring, bonds look attractive from valuation perspective; upgrade to Buy
October 5th, 2022
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