SriLankan Airlines (UL, Colombo International) has declared a default on its outstanding USD175 million government-guaranteed bonds due June 2024, it announced in a disclosure on the evening of February 7.

The state-owned carrier’s default on the 7% bond occurred as a result of a non-payment of the coupon which fell due on December 25, 2022.

“The board of directors of the company makes reference to the trust deed dated 25 June 2019 in relation to the 2024 Bonds and the coupon payment which fell due on 25 December 2022,” it said in the brief statement. “The board hereby gives notice of an Event of Default pursuant to Condition 8(a)(i) of the 2024 Bonds as a result of the failure to pay the coupon due on 25 December 2022.”

SriLankan Airlines had already promised in December to hold an extraordinary bondholders’ meeting on January 20 to seek approval to defer two rounds of interest payments due on the bonds. But it then cancelled that meeting on January 17 without providing a reason.

The February 7 filing concluded: “The board intends to communicate further with holders of the 2024 Bonds in due course.”