Dec 15, 2008 (LBO) – Rating agency Standard & Poor’s (S&P) said it has downgraded Sri Lanka’s long term foreign currency sovereign credit rating to B from B+ with a stable outlook due to its deteriorating external liquidity position.
Sri Lanka’s long term local currency rating had also been downgraded to B+ from BB- while the short term rating on the sovereign has been affirmed B with a stable outlook.
S&P said that in tandem with the sovereign credit rating downgrade the transfer and convertibility assessment of Sri Lanka had been lowered to B+ from BB-.
The rating on Sri Lanka’s senior unsecured debt has also taken a hit with foreign currency debt lowered to B from B+, and the local currency debt rating to B+ from BB-.
The ratings on Sri Lanka reflect high government and external indebtedness, weak revenue mobilization, political and security concerns, as well as the rising balance of payments pressures experienced lately, with the resultant decrease in foreign reserve cushion, said S&P.
We believe these are the principal sources of risk for the Sri Lankan economy, which, in the