S&P pushes Lankan bonds deeper into junk territory with ‘default’ rating

Global ratings agency S&P Global yesterday downgraded its rating on Sri Lankan bonds to ‘D’, representing default, following missed interest and principal payments, Reuters reported. 

Sri Lanka, which defaulted on a bond payment earlier this year, has US $ 12 billion in overseas debt with private creditors.

The country’s foreign debt repayment suspension announced in mid-April prevents payment of interest and principal obligations due on the international sovereign bonds issued by the country. 

S&P said it did not expect the Sri Lankan government, which remains in default on some foreign currency obligations, to make the bond payments within 30 calendar days after their due dates.

The ratings agency affirmed its ‘SD’ long-term and ‘SD’ short-term foreign currency sovereign ratings on Sri Lanka as well as reiterated the outlook for the island nation at ‘negative’.

The country is considering a restructuring of local and foreign debt. It is due to restart bailout talks with the International Monetary Fund this month in the hope of securing US $ 3 billion in funding.