What if Sri Lanka has to restructure a second time?
Sri Lanka reopening its restructuring after growth disappoints is serial EM credit: HY softens modestly and VIX ticks up, but it stays local. Its own 2022 default and the protracted bondholder talks are the direct precedent; Greece's multiple 2010-12 program revisions show how 'second restructurings' become the base case once growth misses. Transmission is to IMF/bilateral (China/India/Paris Club) creditors; global equity impact is minimal as priced.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Colombo reopens its restructuring after growth disappoints and the IMF program goes off track. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Growth surprise ▼ — which propagate through our causal graph to the markets below.