Moody’s might increase Sri Lanka’s credit standing

By Rodrigo Campos and Aatrayee Chatterjee

(Reuters) – Moody’s (NYSE:MCO) might increase Sri Lanka’s ‘Ca’ long-term overseas foreign money score, the credit score rankings company mentioned on Wednesday, following the federal government’s bond-exchange supply geared toward finishing the restructuring of worldwide bonds.

The bond swap, launched on Tuesday, is a vital a part of the island nation’s ongoing $12.55 billion debt restructuring and efforts to stabilize the economic system.

Moody’s provisionally rated the brand new U.S. dollar-denominated debt choices ‘Caa1’, three notches above the present sovereign score, although nonetheless deep into ‘junk’. The federal government supplied macro-linked bonds (MLBs), a governance-linked bond (GLB), and stepup and past-due curiosity bonds.

MLBs have a draw back on principal and the GLB is the primary of its type, which raised doubts about whether or not businesses would price the bonds – a requirement for inclusion in indexes.

“Moody’s announcement of score the MLBs is smart and may help buying and selling liquidity of the securities put up alternate,” mentioned Samy Muaddi, head of rising markets mounted revenue at T.Rowe Worth, including that the contingency options of the MLB construct on established precedent in international mounted revenue.

Moody’s mentioned the choices will rank equally with different related authorities obligations.

Sri Lanka had defaulted on its overseas debt for the primary time in Might 2022, reeling beneath a extreme disaster amid a heavy debt burden and declining overseas alternate reserves.

Sri Lankan USD bonds rose on Wednesday, with the June 2025 challenge up 0.75 cent at 65.875 cents on the greenback.

(This story has been corrected to say that the federal government ‘supplied,’ not ‘issued,’ in paragraph 3)