Fitch rates Sri Lanka’s upcoming Bond Issue ‘B+’

Fitch Ratings has assigned Sri Lanka’s upcoming USD-denominated international bond issue, which matures in 2015, a ‘B+’ rating. The rating is in line with Sri Lanka’s Long-term foreign currency Issuer Default Rating of ‘B+’, which has a Stable Outlook.

Fitch revised the Outlook on Sri Lanka’s ratings to Stable from Negative on October 9, 2009 based on positive changes to sovereign credit fundamentals following the end of the 26-year war, the approval of a USD2.6bn IMF agreement and the return of private sector capital inflows. In the agency’s view, there is a real opportunity for economic renewal as part of the post-war transformation of Sri Lanka. A more settled political and security environment should allow policymakers to focus more on economic issues, including construction and development in areas directly affected by the war - a process that has already begun.

In addition, the labour force will effectively expand to include these same areas, and costs such as transport and insurance should decline.