Fitch Affirms SriLankan Airlines’ Govt.guaranteed bonds at ‘B’

Fitch Ratings has affirmed SriLankan Airlines Ltd.’s (SLA) $ 175 million, 5.3% Government guaranteed bonds due 2019. 

The airline’s bonds are rated at the same level as SLA’s parent, the Government of Sri Lanka (B/Stable) due to the unconditional and irrevocable guarantee provided by the Government, Fitch ratings said in a statement. The State held 99.5% of SLA as at end-2018 through direct and indirect holdings.

Fitch has rated SLA’s US dollar-denominated bonds at the same level as the sovereign due to the unconditional and irrevocable guarantee provided by Government. The rating is not derived from its issuer’s standalone credit profile, and is therefore not comparable with that of industry peers. 

The main factors that individually, or collectively, could trigger a positive rating action are improvement in external finances supported by higher non-debt inflows, or a reduction in external sovereign refinancing risks from an improved liability profile, improved policy coherence and credibility and stronger public finances underpinned by a credible medium-term fiscal strategy.

The main factors that, individually or collectively, could trigger negative rating action are further increases in external funding stresses that threaten the ability to repay external debt, continued political uncertainty that contributes to a loss of investor confidence, possibly affecting the macroeconomic outlook and a deterioration in policy coherence and credibility that leads to an increase in general Government debt and deficit levels.