Fitch downgrades Sri Lanka further

Fitch Ratings, on Thursday (19), downgraded Sri Lanka’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to ‘RD’ (restricted default) from ‘C’.On April 13, Fitch downgraded Sri Lanka to ‘C’ rating, following the announcement that Sri Lanka has suspended debt servicing of several categories of its external debt, including bonds issued in the international capital markets and foreign currency-denominated loan agreements or credit facilities with commercial banks or institutional lenders.In a statement Fitch said that it downgraded Sri Lanka’s LTFC IDR to ‘RD’ following the expiry of the 30-day grace period on coupon payments that were due on April 18, 2022, on two international sovereign bonds.

“We have downgraded Sri Lanka’s foreign-currency issue ratings to ‘D’ from ‘C’, given the default on the senior unsecured foreign-currency bonds and the cross-default clauses triggered in the other rated international foreign-currency sovereign bonds,” Fitch said.However, the rating agency kept Sri Lanka’s Long-Term Local-Currency IDR at ‘CCC’. Fitch said that the government has continued to service local-currency debt.Sri Lanka’s credit rating has been dropping steadily since late 2019. The ratings dropped from ‘B’ on September 27, 2019, to ‘CCC’ on June 14, 2021. The country’s credit rating was downgraded to ‘CC’ on December 17, 2021.