Rodrigo Olivares-Caminal and Rosario Bustillo, of the Sovereign Advisory Practice, have published a new article in the Business Law Review Wolters Kluwer focusing on advances in sovereign debt restructuring.
The article examines Sri Lanka’s 2024 sovereign debt restructuring, following the country’s default in 2022 and its subsequent IMF program. With nearly 98% creditor participation, this debt restructuring marks an important milestone not only for Sri Lanka’s economic recovery but also for sovereign debt practices more broadly.
Key takeaways from our analysis include:
- Innovative bond structures such as Macro-Linked Bonds (GDP-linked) and the world’s first Governance-Linked Bonds, which tie financial terms to governance reforms.
- Transparency and accountability through the role of information covenants and reporting requirements in strengthening trust between sovereigns and creditors.
- Setting a new precedent for how contractual design can align incentives, balance risks, and encourage reform, offering lessons for future sovereign debt restructurings.
This case highlights how legal and financial engineering can be leveraged to create sustainable solutions for debt-distressed countries while promoting stronger governance and transparency.
Read the full article here.
Access Spanish version here.
