August 09, 2007 (LBO) – Though Sri Lanka had “substantial” foreign debt, the country would be able to maintain external liquidity even after an upcoming bond issue, Standard & Poor’s Rating Services (S&P) has said. “The interest burden of the debt was nearly 30 percent of general government revenue, while debt-to-revenue ratio, at an estimated 513 percent, underscores the high indebtedness and the relatively low fiscal resource base available to service it,” S&P said.
Sri Lanka is raising 500 million dollars in international markets. The money is needed reduce pressure on domestic debt markets and shore up the exchange rate which has come under pressure in recent months.
JP Morgan Chase, Barclays and HSBC are managing the issue. “Even accounting for a planned international bond issue, concessional funds are expected to remain the primary source of foreign financing,” S&P said after upgrading the negative outlook on Sri Lanka’s ‘B+’ speculative rating to stable.
“Standard & Poor’s expects Sri Lanka to be able to maintain adequate external liquidity, supported by limited recourse to short-term borrowing and strong remittance inflows.”
S & P said public external debt was 45 percent of the economy o