Sri Lanka is poised to initiate negotiations to restructure $12 billion in defaulted global bonds next week, with hopes of swiftly reaching a resolution ahead of upcoming presidential elections, sources reveal. Bond prices have responded positively to the news.

A steering committee of bondholders will commence talks, considering a government proposal to rework overseas debt defaulted since 2022. President Ranil Wickremesinghe plans for officials to engage in discussions with bondholders in Europe, followed by joint talks with the IMF and World Bank in April, aiming to conclude matters by June-July.

Rothschild & Co. and Lazard Inc., advisers to bondholders and the government respectively, are yet to comment. Progress in Sri Lanka's restructuring coincides with advancements in similar negotiations in Ghana and Zambia. Sri Lanka's proposal last month aims to overhaul $27 billion of foreign debt, crucial for continued IMF financing.

The government has already secured agreements with key creditors, including China, India, the Paris Club, and local debt holders.