Debt Swap

Mar. 09 (LBO) — State-run People’s Bank is negotiating with the treasury to replace over Rs. 20 billion worth of restructuring bonds with tradable government treasuries, officials said Thursday. Around Rs. 10.54 billion worth of 30-year restructuring bonds were issued in April 1993, priced at 12 percent, with interest payable every six months, according to the 2005 financial statements of People’s Bank released Thursday.

A further Rs. 10.1 billion bond paper was issued in October 1996, carrying ten-year maturity, priced at 14 percent interest.

“In order to enhance the bank’s liquidity and competitive position, we undertake to replace the GOSL restructuring bonds of approximately Rs. 10 bn which are due to mature in October 2006 with tradeable government treasury bonds, which will mature in a phased out manner,” Treasury Secretary P B Jayasundara said while issuing a letter of comfort to the bank last month.

The government has also agreed to give financial support up to Rs. 7.584 billion, so that People’s Bank can meet Central Bank’s minimum capital requirements.

The bank’s Chief Executive Asoka de Silva says negotiations are now under way to structure the tenure of the new bon