JPMorgan backs Sri Lanka bonds on bets that crippling crisis to ease

LONDON (Reuters) - U.S. investment bank JPMorgan backed Sri Lanka's crisis-hit government bonds on Wednesday, saying recent political changes in the country should gradually improve its strains and help its talks with the International Monetary Fund.

Adding an 'overweight' - effectively a buy recommendation - JPMorgan analysts said: "political stability should pave the way for bonds to move higher from near all-time lows".

Sri Lanka is officially now in default as a so-called "grace period" to make some already-overdue bond interest payments expired on Wednesday.

"We think this stability should result in both IMF discussions and the process of appointing legal and financial advisors moving forward," JPMorgan added.

(Reporting by Marc Jones, editing by Karin Strohecker)