Standard & Poor’s (S&P Global Ratings) has announced it will not upgrade Sri Lanka’s debt rating due to the unresolved restructuring of a $175 million bond issued by SriLankan Airlines. This bond, which is government-guaranteed, remains in default and is a key factor delaying the nation’s credit rating improvement.
“We may consider upgrading our long-term foreign currency sovereign credit rating once Sri Lanka completes the restructuring of its remaining foreign currency-denominated commercial debt, including the bond issued by SriLankan Airlines,” S&P stated.
This decision stands in contrast to actions taken by other global credit rating agencies. Fitch Ratings and Moody’s have both upgraded Sri Lanka’s sovereign credit rating following the country’s progress in restructuring its sovereign debt and securing agreements with creditors.
Despite these advancements, the unresolved issue of SriLankan Airlines’ bond continues to weigh on S&P’s assessment. This highlights the challenges Sri Lanka faces as it works to restore financial stability and regain investor confidence after its default on external debt in 2022.
The differing assessments by S&P, Fitch, and Moody’s underscore the nuanced view of Sri Lanka’s economic recovery and the need for comprehensive resolution of all outstanding obligations to improve its global credit standing.
