Sri Lanka is in talks with advisory firm Lazard to help with a potential debt buyback as it seeks to improve debt sustainability following its recent restructuring, the country's director of public debt said.
Udeni Udugahapattuwa, director general of Sri Lanka's Public Debt Management Office (PDMO), told a parliamentary committee last week that the government was considering a buyback as part of its liability-management strategy.
"Under liability management we are initially focused on considering a buyback," Udugahapattuwa said on July 23, according to a recording shared by Parliament on Thursday. "We will have to get expert assistance for this as our officers have not yet been trained in this area."
Lazard declined to comment.
A finance ministry source told Reuters the talks were at "a very early stage" and said the government would need to assess the costs of a buyback before finalising any plans.
Sri Lanka largely completed a debt restructuring in 2024, after defaulting in 2022 amid the worst economic crisis in a generation.
The country's post-restructuring debt includes bonds with "state-contingent debt instruments", which provide investors with additional payments if certain economic or fiscal targets are met. While such instruments can help facilitate restructurings, they are complex and can raise borrowing costs.
Lazard last month advised Zambia, which also recently restructured its debt, on a buyback of a contingent bond.
Sri Lanka's Finance Ministry did not immediately respond to a request for comment.
