Moody's Ratings has announced that Sri Lanka's Ca long-term foreign currency issuer rating is now under review for a potential upgrade, replacing its previous stable outlook.
Additionally, Moody’s assigned provisional (P) Caa1 foreign currency senior unsecured ratings to new USD-denominated debt issued as part of the government’s exchange offer.
These bonds include macro-linked bonds (MLBs), governance-linked bonds (GLBs), and step-up and past-due interest (PDI) bonds.
The decision to review the issuer rating follows the government's recent exchange offer, which aims to finalize the restructuring of international bonds. If successful, this would lower the risk of default on new issuances.
This debt restructuring is part of a broader economic reform program supported by development partners like the International Monetary Fund (IMF). These reforms are designed to reduce external vulnerabilities, improve government liquidity, and enhance fiscal and debt sustainability.
The review will continue until the exchange offer concludes and the outcome of the restructuring is clear.
Sri Lanka’s commitment to reforms and its capacity for implementation are key factors driving the potential upgrade.
