Fitch affirms SriLankan Airlines’ Government Guaranteed Bonds at ’C’; withdraws rating

Fitch Ratings has affirmed the rating on SriLankan Airlines Limited's (SLA) US$175 million government guaranteed 7 per cent unsecured bonds due on June 25, 2024 at 'C', and withdrawn the rating.

The rating on the bonds was driven by the unconditional and irrevocable guarantee of the government of Sri Lanka (Long-Term Foreign-Currency Issuer Default Rating (IDR): RD). Fitch has chosen to withdraw the rating for commercial reasons. Therefore, Fitch will no longer provide ratings or analytical coverage for SriLankan Airlines, the agency said in a statement on Tuesday.

SLA did not pay the bonds' principal and interest on the due date and is currently within the 30-day grace period. In addition, the airline's previous defaults on the bond's coupon payments due December 25, 2023, June 25, 2023 and December 25, 2022 are continuing, with grace periods having expired. Another event of default was triggered due to the April 12, 2022 announcement by the Sri Lankan government of a debt moratorium on several categories of sovereign and public sector entities' external debt, as well as the ensuing non-payment of interest on the government's external debt, Fitch said.