Fitch downgrades SriLankan Airlines

Fitch Ratings said it downgraded the rating on SriLankan Airlines Ltd.’s dollar-denominated government-guaranteed bonds to B+ from BB-.

The downgrades follow a similar downgrade of Sri Lanka’s long-term foreign- and local-currency issuer default ratings to B+ with a negative outlook.

The bonds on the company, a national carrier, 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, Fitch said.

The Sri Lankan sovereign faces increased refinancing risks on account of high upcoming external debt maturities amid the country’s vulnerability to a shift in investor sentiment, the agency said.

The sovereign’s external liquidity position also remains strained, reflecting pressure on foreign-exchange reserves, Fitch added.

The downgrade also reflects deteriorating public finances driven by consistently low general government revenues, the agency said.

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