Standard Chartered had lowered the credit outlook for Sri Lanka to stable from positive but said a number of measures had been taken to stabilize foreign exchange reserves this year.
"However, they will need to stay the course in order to prevent stresses building up again on the fiscal and external fronts," Standard Chartered said in a comparison of Asian credit.
"While there have been some comparisons with the Vietnam situation, we are slightly more comfortable with Sri Lanka given the better availability and transparency of data and the IMF's involvement.
The International Monetary Fund is expected to approve a final 450 million US dollar tranche under a 2.5 billion US dollar bailout later this month and officials have said they will seek a new mechanism perhaps backed with more funding.
At current valuations, Standard Chartered was neutral on Sri Lankan bonds, compared to being underweight on countries like Philippines.Sri Lanka' balance of payments is expected to be in surplus by about a billion US dollar by end 2012, the report said.
Later this month Sri Lanka is expected to sell a billion US dollar bond, about half of which will go to repay a maturing bond.