Moody's may raise Sri Lanka's credit rating
Moody's may raise Sri Lanka's 'Ca' long-term foreign currency rating, the credit ratings agency said on Wednesday, following the government's bond-exchange offer aimed at completing the restructuring of international bonds.
The bond swap, launched on Tuesday, is an important part of the island nation's ongoing $12.55 billion debt restructuring and efforts to stabilize the economy.
Moody's provisionally rated the new U.S. dollar-denominated debt offerings 'Caa1', three notches above the current sovereign rating, though still deep into 'junk'. The government offered macro-linked bonds (MLBs), a governance-linked bond (GLB), and stepup and past-due interest bonds.
MLBs have a downside on principal and the GLB is the first of its kind, which raised doubts about whether agencies would rate the bonds - a requirement for inclusion in indexes.
"Moody's announcement of rating the MLBs is sensible and should support trading liquidity of the securities post exchange," said Samy Muaddi, head of emerging markets fixed income at T.Rowe Price, adding that the contingency features of the MLB build on established precedent in global fixed income.
Moody's said the offerings will rank equally with other similar government obligations.
Sri Lanka had defaulted on its foreign debt for the first time in May 2022, reeling under a severe crisis amid a heavy debt burden and declining foreign exchange reserves.
Sri Lankan USD bonds rose on Wednesday, with the June 2025 issue up 0.75 cent at 65.875 cents on the dollar.
(This story has been corrected to say that the government ‘offered,’ not ‘issued,’ in paragraph 3)
Source: Reuters
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IMF MD says SL achieves significant step forward in EDR
The International Monetary Fund (IMF) Managing Director Kristalina Georgieva yesterday said Sri Lanka achieved a significant step forward in terms of External Debt Restructuring following the setting up of the Exchange of International Sovereign Bonds and wide acceptance from creditors.
In a statement, Georgieva said: “The Sri Lankan authorities
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| (IMF) Managing Director Kristalina Georgieva |
“Building on this progress, and following several months of constructive discussions, the agreements reached by the Sri Lankan authorities with both the Steering Committee of the Ad Hoc Group of external bondholders, and the Local Consortium of Sri Lanka, mark a significant step forward. The terms of these agreements have been assessed by the Fund staff as being in line with the parameters of the IMF-supported program,” Georgieva said.
“Anchored by policies under the IMF-supported program, the successful implementation of these agreements will provide significant external debt service relief and further contribute to Sri Lanka’s efforts to restore debt sustainability,” she added.
The IMF Chief said to capitalise on this momentum, rapid completion of the debt operation with high creditor participation would be vital for the success of the program. In parallel, the authorities continue to finalise other remaining debt restructuring agreements. This collective effort is key to supporting the success of Sri Lanka’s debt restructuring efforts.
“The Sri Lankan authorities have reaffirmed their determination to persevere with their reform agenda and put the economy on a path of sustained and high growth. The continued support from international financial institutions and other official creditors, together with the participation of bondholders in a debt exchange consistent with debt sustainability, is necessary to underpin the success of these reform efforts. The IMF remains a steadfast partner in supporting Sri Lanka and its people and stands ready to assist the country achieve its economic and social reform goals,” IMF Chief Georgieva added.⍐
