S&P lowers Sri Lanka’s sovereign rating to Select Default grade

S&P lowers Sri Lanka’s sovereign rating to Select Default grade

Global rating agency Standard and Poor’s has lowered the long-term foreign currency sovereign credit rating on Sri Lanka to “SD” (selective default) from “CC” as the crisis-hit Island nation missed an interest payment on bonds.

On April 18, Sri Lanka missed interest payments on its $1.25 billion international 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 said in a statement.

At the same time, it also lowered ratings on bonds to ‘D’ (default) from ‘CC’. However, it affirmed ‘CCC-/C’ rating for local currency sovereign ratings on Sri Lanka. The outlook on the local currency ratings remains negative.

The negative outlook reflects the high risk that the government could restructure its local currency debt amid the country’s economic, external, and fiscal pressures.

It could lower the local currency ratings if there are indications of non-payment or restructuring of Sri Lankan rupee-denominated obligations, the agency added. (Colombo Gazette)

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