Moody’s Investors Service has downgraded Sri Lanka’s sovereign rating to Caa2 from Caa1, taking the country’s credit deeper into speculative grade as foreign reserves continued to fall amid money printing and crippled forex markets.
“A large financing envelope that Moody’s considers to be secure remains elusive and the sovereign continues to rely on piecemeal funding such as swap lines and bilateral loans, although prospects for non-debt generating inflows have improved somewhat since Moody’s placed Sri Lanka’s rating under review for downgrade,” the rating agency sai
“Persistently wide fiscal deficits due to the government’s very narrow revenue base compound this challenge by keeping gross borrowing needs high and removing fiscal flexibilit
“The decision to downgrade the ratings is driven by Moody’s assessment that the absence of comprehensive financing to meet the government’s forthcoming significant maturities, in the context of very low foreign exchange reserves, raises default risks
Liquidity injections and dysfuctional forex markets due to loss of confidence in the domestic currency, had made it difficult to transfer wealth out of the country through the credit system not just for debt but also for current transactions. As a result the country is also seeking credit lines for import..”
https://www.google.com/amp/s/econom...gn-rating-downgraded-to-caa2-by-moodys-87366/
“A large financing envelope that Moody’s considers to be secure remains elusive and the sovereign continues to rely on piecemeal funding such as swap lines and bilateral loans, although prospects for non-debt generating inflows have improved somewhat since Moody’s placed Sri Lanka’s rating under review for downgrade,” the rating agency sai
“Persistently wide fiscal deficits due to the government’s very narrow revenue base compound this challenge by keeping gross borrowing needs high and removing fiscal flexibilit
“The decision to downgrade the ratings is driven by Moody’s assessment that the absence of comprehensive financing to meet the government’s forthcoming significant maturities, in the context of very low foreign exchange reserves, raises default risks
Liquidity injections and dysfuctional forex markets due to loss of confidence in the domestic currency, had made it difficult to transfer wealth out of the country through the credit system not just for debt but also for current transactions. As a result the country is also seeking credit lines for import..”
https://www.google.com/amp/s/econom...gn-rating-downgraded-to-caa2-by-moodys-87366/
