• Analysts predict the nation will attract investors to its restructured dollar bonds amid macro-economic improvement
• IMF projections show public debt falling below 95% of GDP by 2030, ahead of the 2032 target

Sri Lanka is likely to beat the expectation of the International Monetary Fund (IMF) two years ahead of its deadline attracting investors to its restructured dollar bonds, analysts said.

Speaking to Bloomberg television on Wednesday (2), Hong Kong based-investment manager Triada Capital Founder and CIO Monica Hsiao said that Sri Lanka is an example of an emerging market in the region seeing a macro-economic improvement.

“Looks like they (Sri Lanka) are going to beat the expectation of the IMF by two years ahead,” she said.

She said that spreads on developed markets bonds are so tight, making investors look for more premiums on emerging market bonds.

“So on an all-in yield basis, it’s still relatively attractive. We are able to find decent high yield bonds that are between 8-10% yields these days, which is still pretty good,” she said.

Sri Lanka’s restructured 2030 step up macro linked bond yield rose by 30 bps in the month of June.

In the latest Fiscal Strategy Statement by Finance Ministry said that the latest IMF projections for Sri Lanka’s public debt see a reduction from around 119.2% of GDP in 2022 to around 94.5% of GDP by 2030, which is consistent with debt falling below the initial target of 95% of GDP by 2032.

“Adherence to the primary balance target and primary expenditure ceiling will support the attainment of this goal in the absence of major external shocks,” the Finance Ministry said.

Also, the Finance Ministry is confident that the gross financing need (GFN) target of below 13% of GDP, on average, over the period 2027-32, will reach a projected average of 12.7% coming in the period.