S&P downgrades Sri Lanka's foreign currency rating amid economic crisis

Global rating agency Standard and Poor’s (S&P) today lowered Sri Lanka’s long-term foreign currency sovereign rating from “CCC” to “CC” to reflect looming default on some affected obligations.

Rating agency warned that it could lower the foreign currency rating to ‘SD’ (Selective Default) upon confirmation that the government has missed a coupon or principal payment on commercial foreign currency debt. Upon completion of any bond restructuring, it will assign new foreign and local currency sovereign credit ratings that reflect Sri Lanka’s post-exchange creditworthiness, the rating agency added.

The company warned that it could downgrade Sri Lanka into selective default upon “confirmation that the government has missed a coupon or principal payment on commercial foreign currency debt.” S&P said Sri Lanka’s next interest payments are due on April 18 and the failure to cover them will likely result in default, as would an outright debt restructuring.