S&P pushes Sri Lankan bonds deeper into undesirable territory with a ‘default’ rating

People walk along Pettah market, amid the country’s economic crisis, in Colombo, Sri Lanka, April 18, 2022. REUTERS/Navesh Chitrakar/File Photo

Aug 15 (Reuters) – Global ratings agency S&P Global downgraded Sri Lanka’s bond rating to “D” on Monday, representing default, following non-payment of interest and principal.

The South Asian nation, which defaulted on a bond payment earlier this year and has $12 billion in overseas debt to private creditors, has been grappling with the worst financial crisis in its history. independent. Read more

Sri Lanka’s external public debt freeze prevents the payment of interest and principal obligations due on the government’s international sovereign bonds.

S&P said it does not expect the Sri Lankan government, which remains in default on some foreign currency bonds, to make payments on the bonds within 30 calendar days of their due date.

The rating agency affirmed its long-term “SD” and “SD” short-term foreign currency sovereign ratings on Sri Lanka, and reiterated the outlook for the island nation at “negative”.

The country is considering a restructuring of local and external debt. It is due to resume bailout talks with the International Monetary Fund (IMF) in August in hopes of securing $3 billion in financing.

Reporting by Richard Rohan Francis in Bengaluru; Editing by Shinjini Ganguli

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