Moody's places Sri Lanka's Caa1 rating under review for downgrade

Global rating agency Moody's today placed the Government of Sri Lanka's “Caa1” foreign currency long-term issuer and senior unsecured debt ratings under review for downgrade.

The rating decision is driven by assessment that the island nation's increasingly fragile external liquidity position raises the risk of default. It also reflects governance weaknesses in the ability of the country's institutions to decisively mitigate significant and urgent risks to the balance of payments.

Although the government has secured some financing, mainly from bilateral sources, its financing options remain narrow with borrowing costs in international markets still prohibitive, Moody's said in a statement.

Moody's expects Sri Lanka's