Standard and Poor's has cut Sri Lanka's sovereign rating to 'selective default', as the country missed interest payments on USD $ 1.25 billion worth of sovereign bonds.
Individual securities were downgraded to default of D, the rating agency added.
Sri Lanka has 30 days to make payment on the coupon which was due on April 18.
“We do not expect the government to make the coupon payments within 30 calendar days after their due dates,” Standard and Poor’s said.
“In our view, achieving a more sustainable fiscal position will require restructuring the government’s local currency debt,” the agency added
“Sri Lanka’s local currency debt constitutes more than 50% of its overall indebtedness, and a considerable proportion of its very high-interest burden relative to revenues.”
“Failure to establish a sustainable government could further complicate and hinder progress in the discussions with the IMF. This could ultimately delay a comprehensive reform program."
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