Global rating company Standard and Poor’s in the present day lowered long-term overseas foreign money sovereign credit score rating on Sri Lanka to “SD” (selective default) from “CC” because the crisis-hit Island nation missed an curiosity fee on bonds.
On April 18, Sri Lanka missed curiosity funds on its $1.25 billion worldwide sovereign bonds maturing in 2023 and 2028.
“We do not expect the government to make the coupon payments within 30 calendar days after their due dates,” S&P mentioned in an announcement.
At the identical time, it additionally lowered scores on bonds to ‘D’ (default) from ‘CC’. However, it affirmed ‘CCC-/C’ rating for native foreign money sovereign scores on Sri Lanka. The outlook on the native foreign money scores stays adverse.
The adverse outlook displays the excessive danger that the federal government may restructure its native foreign money debt amid the nation’s financial, exterior, and financial pressures.
It may decrease the native foreign money scores if there are indications of non-payment or restructuring of Sri Lankan rupee-denominated obligations, the company added.
It may revise the outlook to steady or elevate the native foreign money scores if it perceives that the chance of the federal government’s native foreign money debt being excluded from any debt restructuring has elevated. This could possibly be the case if, for instance, the federal government receives vital donor funding which provides it a while to implement rapid and transformative reforms.
S&P mentioned it might elevate our long-term overseas foreign money sovereign issuer credit score rating upon completion of the federal government’s bond restructuring. The rating would mirror Sri Lanka’s post-restructuring creditworthiness.