Fitch downgrades SL to Default – IMF decision on next week

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Fitch Ratings downgraded Sri Lanka’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) to Restricted Default (RD), from ‘C’.

In its rating action commentary released on Thursday (20) Fitch said the downgrade of Sri Lanka’s LTFC IDR follows the expiry of the 30-day grace period on coupon payments that were due on April 18, 2022, on two international sovereign bonds.

The downgrade of Sri Lanka’s rating to ‘RD’ reflects a default event. On April 12, 2022, the Finance Ministry made a statement that it suspended the normal debt servicing of several categories of its external debts, including the bonds issued in the international capital markets and foreign currency-denominated loan agreements or credit facilities with commercial banks or institutional lenders. Following the announcement, on April 13, Fitch downgraded the LTFC IDR to ‘C’.

Meanwhile, the technical discussions between Sri Lanka and the International Monetary Fund (IMF) on a potential loan programme will come to a close on May 24, IMF Spokesman Gerry Rice said.

Rice, addressing a virtual IMF briefing on Thursday (20), said that the agency is closely monitoring the events that are unfolding in the crisis-hit island nation.

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