Friday Nov 21, 2025
Friday Nov 21, 2025
Friday, 21 November 2025 05:50 - - {{hitsCtrl.values.hits}}
The agreement-in-principle with Bondholders of SriLankan Airlines marks a crucial breakthrough for the Government few thought possible, although Sri Lanka still needs International Monetary Fund (IMF) and Official Creditor Committee non-objection to proceed.
Last September, when S&P Global Ratings raised its long- and short-term foreign currency sovereign credit ratings on Sri Lanka to ‘CCC+/C’ from ‘SD/SD,’ it said that the upgrade reflects Sri Lanka’s efforts to complete the restructuring of remaining commercial debt, including Government-guaranteed SriLankan Airlines Bonds, following the December 2024 exchange of most Eurobonds.
“Talks on the airline’s debt began earlier this year, with an offer grounded in comparability of treatment with other external creditors,” the ratings agency then said.
“The agency sees a possibility of some holdout creditors that could make further resolution unlikely as time passes, but does not expect this to derail or reverse the overall restructuring because of comparability-of-treatment principles and most-favoured creditor clauses in the restructured bonds,” it noted.
However, S&P said the rating upgrade was backed by a strong economic recovery, rapid fiscal consolidation and reform under an IMF program, a rebuild in foreign exchange reserves, an improving external position, and ongoing progress in reducing fiscal risks from State-owned enterprises.
Offsetting factors include a high debt burden, since most high-yielding domestic commercial debt was excluded from the restructuring, and a very heavy interest bill of about half of general Government revenue.
