Share investors’ worries over SL’s loan restructuring effort trammel bourse

By Hiran H.Senewiratne

Although there was a degree of stability in the share market yesterday, the major worry prevailed among investors over the delay on the part of the Chinese government to grant credit assurances to Sri Lanka to enable the latter to restructure its loan portfolio and obtain the IMF bailout, stock market analysts said.

The market started on a negative note and at the middle of the session there was an improvement but that momentum was not sustained.

Amid those developments both indices moved downwards. The All- Share Price Index went down by 24.62 points and S and P SL20 declined by 17.29 points. Turnover stood at Rs 1.7 billion with two crossings. Those crossings were reported in Lanka IOC, which crossed 159,000 shares to the tune of Rs 33.2 million, its shares traded at Rs 209 and Lanka Wall Tiles 400,000 shares crossed for Rs 22.2 million, its shares traded at Rs 55.50.

In the retail market companies that mainly contributed to the turnover were, Softlogic Life Insurance Rs 154 million (1.3 million shares traded), Softlogic Capital Rs 126.6 million (eight million shares traded), JKH Rs 125 million (898,000 shares traded), LOLC Finance Rs 109 million (15.8 million shares traded), Expolanka Holdings Rs 57.1 million (308,000 shares traded) and Chevron Lubricants Rs 55.4 million (528,000 shares traded). During the day 77.7 million share volumes changed hands in 17000 transactions.

Holders of Sri Lanka’s foreign bonds want more clarity on the nation’s local-currency debt before they sit down for formal restructuring talks, informed sources said.

Creditors are concerned that managing Sri Lanka’s local debt pile will prove costly, which could reduce payments earmarked for foreign bondholders or even trigger another restructuring effort down the road, said the sources, who asked not to be identified because the discussions are private. “The Asian island nation seeks to restructure its Eurobonds while repaying its local-currency obligations in full, they said.

Some bondholders are recommending that Sri Lanka follows Ghana’s footsteps to help its stalled restructuring efforts. The African country has offered a debt swap plan for local securities in addition to its Eurobond negotiations.

Sri Lanka defaulted on its dollar debt in May and must clinch good-faith negotiations with private bondholders and receive debt assurances from bilateral creditors, including China, Japan and India, to get the International Monetary Fund’s nod for a $2.9 billion loan.