A case against Sri Lanka for a loan taken to an American bank

A bondholder has filed a lawsuit against Sri Lanka in a Manhattan district court in the United States for failing to pay a $ 1 billion international sovereign bond maturing next month.

Hamilton Reserve Bank Ltd, the bank that filed the lawsuit, said Sri Lanka had stopped providing credit services for its sovereign bonds.

The company also asked Sri Lanka to immediately pay $ 257.5 million in principal plus interest, saying it had defaulted on two other bonds.

The lawsuit was filed by Hamilton Reserve Bank Ltd., which holds more than $ 250 million of Sri Lanka's 5.875% international sovereign bonds of US $ 1,000 million due on July 25, more than 25% of the total lease.

Sri Lanka defaulted on two sovereign bonds in May after a 30-day grace period for missed interest payments.

Foreign media reported that it was the first sovereign debt default by Sri Lanka since gaining independence from Britain in 1948.

Hamilton Reserve Bank Ltd. said in the lawsuit that the default was "created by top government officials, including the Rajapaksa family, the country's ruler."

The Reserve Bank of Hamilton has also accused Sri Lanka of discarding bonds from local banks and other stakeholders in restructuring announced loans.

Lawyers representing Hamilton Reserve Bank Ltd. stated that “as a result, the sponsoring Sri Lankan parties will receive a down payment and interest payments.

However, Fidelity Investments, BlackRock, T. Rowe Price, Lord Abbett, JPMorgan, PIMCO, Neuberger Berman and other US investors have defaulted on their payments indefinitely, resulting in a huge loss of up to 80% of their original investment value. The lawyers have pointed out in the complaint that they are suffering.

Foreign media reported that this is the first time in history that Sri Lanka is facing such a default case.