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* S&P Global downgrades Sri Lanka Bonds to ‘D’ after missed payments; sovereign ratings affirmed
Mon, Aug 15, 2022, 09:39 pm SL Time, ColomboPage News Desk, Sri Lanka.

Aug 15, Colombo: Global ratings agency S&P Global on Monday slashed its rating on Sri Lankan bonds to ‘D’, representing default, following missed interest and principal payments.

On Aug. 15, 2022, S&P Global Ratings affirmed its ‘SD’ long-term and ‘SD’ short-term foreign currency sovereign ratings on Sri Lanka.

At the same time, they affirmed ‘CCC-’ long-term and ‘C’ short-term local currency sovereign ratings. The outlook on the long-term local currency rating remains negative.

S&P Global Ratings said they lowered the ratings on the affected bonds to ‘D’, following missed interest payments due on June 3, June 28, and July 18, and a missed principal payment due July 25.

S&P said they do not expect the Sri Lankan government to make the payments within 30 calendar days after their due dates.

The Sri Lanka government remains in default on some foreign currency obligations, including international sovereign bonds (ISBs).

According to the S&P Global, the negative outlook on the local currency rating reflects the high risk to commercial debt repayments over the next 12 months in the context of Sri Lanka’s economic, external, and fiscal pressures.

S&P said they could revise the outlook to stable or raise the local currency ratings if they perceive that the likelihood of the government’s local currency debt being excluded from any debt restructuring has increased. This could be the case if, for example, the government receives significant donor funding, which gives it some time to implement immediate and transformative reforms.

“We would raise our long-term foreign currency sovereign credit rating upon completion of the government’s bond restructuring. The rating would reflect Sri Lanka’s post-restructuring creditworthiness. Our post-restructuring ratings tend to be in the ‘CCC’ or low ‘B’ categories, depending on the sovereign’s new debt structure and capacity to support that debt,” the global rating agency said in a release.

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