Affirms SL’s long-term foreign-currency issuer default rating at ‘CCC+’

As part of its review, Fitch affirmed Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating at ‘CCC+’, saying ratings at this level are guided directly by definitions rather than its sovereign rating model.

The country ceiling was also affirmed at ‘B-’. Senior unsecured long-term debt was affirmed at ‘CCC+’ with a Recovery Rating of RR4, reflecting average recovery prospects in a default scenario. Fitch also removed Sri Lanka’s debt instruments from “under criteria observation.”

An upgrade could come from a substantial decline in the debt-to-GDP ratio, sustained fiscal discipline, stronger revenue mobilisation, and higher growth, Fitch said. Conversely, a downgrade could result from failure to sustain reforms, derailment of the IMF programme, or inability to rebuild reserves.