Moody’s Ratings has announced that it has placed Sri Lanka’s Ca long-term foreign currency issuer rating under review for a potential upgrade. Previously, the rating carried a stable outlook.
Additionally, Moody’s has assigned a (P)Caa1 foreign currency senior unsecured rating to Sri Lanka’s new USD-denominated debt issuances under the government’s exchange offer. These include:
- Macro-Linked Bonds (MLBs)
- Governance-Linked Bond (GLB)
- Step-Up and Past-Due Interest (PDI) Bonds
Key Drivers Behind the Review
The decision to review the rating follows the government’s recent exchange offer announcement, aimed at finalizing the restructuring of international bonds. If successful, the restructuring would:
- Lower default risks on new issuances
- Improve external vulnerability and liquidity management
- Enhance fiscal and debt sustainability
This initiative forms part of broader economic reforms supported by development partners such as the International Monetary Fund (IMF).
Outlook and Next Steps
The review will remain ongoing until the exchange offer is completed and the restructuring outcomes become clear. Moody’s emphasized that Sri Lanka’s commitment to and capacity for reforms are critical factors driving the potential upgrade.
