S&P lowers SL’s sovereign rating outlook

Rating agency, Standard & Poors (S&P) has revised down its outlook on Sri Lanka's B+ long term foreign currency sovereign credit rating outlook to stable from positive while lowering the long term local currency rating to B+ from BB-.

According to S&P credit analyst Takashira Ogawa, the outlook revision on the long-term foreign currency rating reflects the country's deteriorating external liquidity.

"We also lowered the long-term local currency rating to the same level as the foreign currency rating to reflect the country's lack of track record in having a floating exchange rate regime and its still-developing secondary market for debt instruments" Ogawa said.
 
The S& P statement also noted that the ratings are constrained by weak external liquidity, moderately high and increasing external debt, fundamental fiscal weaknesses, the attendant high public debt and interest burden, and political institutions that, in some cases, lack transparency and independence.