Moody’s has rated Sri Lankan Government as ‘B1 Negative’, lower than 2016

Moody’s has rated Sri Lankan Government as ‘B1 Negative’, lower than 2016

By Lahiru Fernando

18 Oct, 2017 | 10:37 pm

Fitch and Moody’s Investor Service are international agencies which has the ability to gauge the economic health of a country.

Yesterday (October 17) we brought to you a report on the Ceylon Electricity Board.

Fitch rated the debt ridden state institution as a top credit rating of ‘AAA’ with a Stable Outlook.

Read more: Credit rating agency gives debt-ridden CEB a top ‘AAA’ rating – How?

Moody’s however, has a different point of view. The investor service has rated the Government of Sri Lanka as ‘B1 negative’.

These are the problems according to Moody’s;

  • Massive borrowing requirements
  • Heavy reliance on external and foreign-currency funding

Moody’s say that these two exposes the country to material liquidity and external financing risk.

They say external vulnerability will increase when large international debt repayments are due between 2019 and 2022.

The bunching of these future external liabilities which will average $3.6 billion per year, raises rollover and external vulnerability risks.

Moody’s say reforms could reduce external vulnerability but their impact is not fully clear yet.

In 2016 Sri Lanka was given a B1 stable rating by Moody’s.