The Central Bank of Sri Lanka rejected rating agency Standard & Poor's assessment of the country’s banking system, which deemed it of “very high risk” earlier this week.

Standard & Poor gave the country a rating of 8, on the Banking Industry Country Risk Assessment (BICRA), with 10 being the highest risk, grouping Sri Lanka with countries such as Nigeria, Tunisia and Kazakhstan.

In a statement released earlier this week, the agency said,

"Our economic risk score of '8' for Sri Lanka reflects a "very high risk" assessment of economic resilience and credit risk in the economy, and a "high risk" assessment of economic imbalances, as our criteria define those terms."

See the full statement here.

Sri Lanka meanwhile denounced the rating, labelling it,

"factually incorrect, illogically analysed and highly contradictory."

See the Central bank’s full statement here.

The bank also announced that they would be issuing a $1 billion bond to be underwritten by Bank of America, Merrill Lynch, Barclays Capital and HSBC, in order to bolster the country’s reserves and defend the weakening rupee.

The rupee is currently trading near a record low of 133.60 against the dollar, having fallen 17% since November.

The bond issue will be country’s fifth since a $500 million 5-year bond in October 2007 and comes as they face a widening trade deficit, growing from the $10 billion last year.

The country is also seeking a further funds from the IMF, in addition to the $2.6 billion loan which has recently ended, but insisted that it was "not a bailout".