S&P lowers Sri Lanka to stable

Standard & Poor's said it revised the outlook on the Democratic Socialist Republic of Sri Lanka to stable from positive.

S&P also said it affirmed its B+ and B foreign-currency sovereign credit ratings.

The agency also lowered its long-term local-currency rating to B+ from BB- and affirmed its B short-term local-currency rating and recovery rating at 4. The transfer and convertibility assessment is unchanged at B+.

The outlook revision reflects the country's deteriorating external liquidity, S&P said.

The lowering of the long-term local-currency rating to the same level as the foreign-currency rating reflects the country's lack of track record in having a floating exchange rate regime and its still-developing secondary market for debt instruments, the agency said.

The ratings are constrained by weak external liquidity, moderately high and increasing external debt, S&P said, and fundamental fiscal weaknesses.

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