Fitch Ratings has downgraded the rating on state-run SriLankan Airlines Limited’s USD 175 million government-guaranteed bonds, due in June 2024, to ‘C’ from ‘CC’.
The move comes after the Sri Lankan government suspended foreign debt payments.
The rating action on the bonds follows the downgrade of Sri Lanka’s Long-Term Foreign-Currency Issuer Default Rating to ‘C’ from ‘CC’, and the downgrade of its foreign-currency bonds issued on international markets to ‘C’ from ‘CC’, the rating agency said.
Fitch said the national carrier’s bonds are rated at the same level as its parent, the state of Sri Lanka, due to the unconditional and irrevocable guarantee provided by the state.
SriLankan Airlines largely operates as a regional airline with a few long-haul flights. As of December 2021, the company has a fleet consisting of wide- and narrow-bodied aircraft in the Airbus A330 and A320 family respectively.
In 2019, SriLankan Airlines issued a USD 175 million bond to roll over a similar-sized issue that matured in June 2019.
The issue was fully guaranteed by the government and Fitch Ratings gave the bond a given provisional rating of ‘B(EXP)’ in line with the sovereign rating.
-Agencies
