They sought so-called macro-linked bonds where the hair cut will reduce if the economy grows faster than the International Monetary Fund expects in a debt sustainability analysis.

If the economy grows as expected, bond holders will concede 40.3 percent in net present value terms at a discount factor of 11 percent, the Finance Ministry said in a statement.The July deal with bondholders were deemed by the IMF as not meeting its debt sustainability framework, a statement said.

Compared to the July deal with bondholders, coupons at the highest economic performance level would reduce by roughly 160 basis points and second highest by 60 basis points. Sri Lanka will issue bonds with face value of 9,158 million dollars for 12,550 million dollars of defaulted bonds.