On June 3, 2024, Sri Lanka reached a groundbreaking agreement with its private creditors to restructure its debt, becoming the first country to utilize a Governance-Linked Bond (GLB). This innovative financial instrument was designed by Verité Research in Colombo.
The Verité-GLB adjusts repayments based on the country’s achievement of mutually agreed governance benchmarks. If these benchmarks are met, Sri Lanka benefits from reduced repayments while bondholders receive a de-risking dividend.
Dr. Nishan de Mel from Verité Research highlighted that this approach aims for a win-win scenario for both the country and its creditors.
For more details on the Verité-GLB, visit this link. Additional information on the agreement can be found on Bloomberg.
