News
Fitch downgrades SL’s Long-Term Local-Currency IDR to ‘RD’
Global rating agency, Fitch, in its latest report downgraded Sri Lanka’s Long-Term Local-Currency (LTLFC) Issuer Default Rating (IDR) to ‘RD’ (Restricted Default) from ‘C’.
In a press release Fitch said the ratings on its local-currency bonds tendered in the domestic debt exchange have been downgraded to ‘D’ from ‘C’ while its other four local-currency bonds not tendered in the domestic debt exchange have been affirmed at ‘C’.
The Long-Term Foreign-Currency (LTFC) IDR has been affirmed at ‘RD’, and the ratings on Sri Lanka’s foreign-currency bonds have been affirmed at ‘D,’ Fitch said.
Given that Fitch typically does not assign outlooks to sovereigns with a rating of ‘CCC+’ or below, all issue ratings have subsequently been withdrawn, the press release said.
“Fitch has withdrawn the issue ratings of Sri Lanka’s foreign and local-currency bonds as these are no longer considered to be relevant to the agency’s coverage,” Fitch said.
Given below is the press release in full: “Distressed Debt Exchange: The downgrade of Sri Lanka’s LTLC IDR reflects the partial completion of an exchange of Sri Lanka’s T-bonds on 14 September as part of a broader domestic debt optimisation (DDO) launched in July 2023. The DDO also includes conversion of T-bills held by the Central Bank of Sri Lanka (CBSL) into treasury bonds (T-bonds), which has not yet been completed.
“In Fitch’s view, the exchange of T-bonds constitutes a distressed debt exchange (DDE) under the agency’s criteria, given that the maturity extension of the tendered bonds represents a material reduction in terms versus the original contractual terms, and given that the exchange is needed to avoid a traditional payment default.
“Reduction in Terms: Eligible bonds for which tenders were received and accepted have been exchanged into 12 new instruments of equal size and the same aggregate principal amount, maturing between 2027 and 2038. Accepted tenders reached about 37% of the outstanding principal amount of eligible bonds outstanding as of 28 June 2023. Accepted tenders were predominantly by superannuation funds, which will face higher tax rates on income from T-bonds if they did not meet a participation threshold.
“Local-Currency Debt Service Continuing: Fitch believes that Sri Lanka has continued to service the T-bonds throughout the DDO process, and that T-bonds not tendered in the exchange will continue to be serviced as per their original terms, including but not limited to the entirety of the 12 series of T-bonds (out of 61 eligible series) for which no valid tenders were received. Four of these 12 series were rated by Fitch and were affirmed at ‘C’ prior to withdrawal.
“Local-Currency Restructuring Incomplete: Under Fitch’s rating criteria, the LTLC IDR will remain in ‘RD’ until the debt exchange is completed in its entirety. Fitch deems the process incomplete, as the exchange of T-bills held by CBSL is still pending. Fitch regards the T-bills as public debt securities, and they are also held by private investors.
“Foreign-Currency IDR in Default: The sovereign remains in default on foreign-currency obligations and has initiated a debt restructuring with official and private external creditors. The Ministry of Finance had issued a statement on 12 April 2022 that it had suspended normal debt servicing of several categories of external debt, including bonds issued in international capital markets, foreign currency-denominated loans and credit facilities with commercial banks and institutional lenders.
“ESG – Governance: Sri Lanka has an ESG Relevance Score of ‘5’ for Political Stability and Rights as well as for the Rule of Law, Institutional and Regulatory Quality and Control of Corruption. These scores reflect the high weight that the World Bank Governance Indicators (WBGI) have in our proprietary Sovereign Rating Model (SRM). Sri Lanka has a medium WBGI ranking in the 45th percentile, reflecting a recent record of peaceful political transitions, a moderate level of rights for participation in the political process, moderate institutional capacity, established rule of law and a moderate level of corruption.
“ESG – Creditor Rights: Sri Lanka has an ESG Relevance Score of ‘5’ for Creditor Rights, as willingness to service and repay debt is highly relevant to the rating and is a key rating driver with a high weight. The affirmation of Sri Lanka’s LTFC IDR at ‘RD’ and downgrade of LTLC IDR to ‘RD’ reflect a default event.
“The Country Ceiling for Sri Lanka is ‘B-‘. For sovereigns rated ‘CCC+’ or below, Fitch assumes a starting point of ‘CCC+’ for determining the Country Ceiling. Fitch’s Country Ceiling Model produced a starting point uplift of zero notches. Fitch’s rating committee applied a +1 notch qualitative adjustment to this, under the balance of payments restrictions pillar, reflecting that the private sector has not been prevented or significantly impeded from converting local currency into foreign currency and transferring the proceeds to non-resident creditors to service debt payments.
Fitch does not assign Country Ceilings below ‘CCC+’, and only assigns a Country Ceiling of ‘CCC+’ in the event that transfer and convertibility risk has materialised and is affecting the vast majority of economic sectors and asset classes.”
News
Coal ash surge at N’cholai power plant raises fresh environmental concerns
Environmental groups have raised fresh concerns over increasing levels of coal ash generated at the Norochcholai Coal Power Plant, warning of serious environmental and public health risks if proper disposal mechanisms are not urgently implemented.
Environmental scientist and Centre for Environmental Justice (CEJ) Chairman Hemantha Withanage, in a strongly-worded comment yesterday, said the growing volume of ash was being treated as a “blessing” by authorities, while, in reality, it posed a major ecological threat.
He told The Island: “More coal and more ash are being celebrated as a blessing. People around Norochcholai should get ready to apply it on their foreheads — and this will affect everyone, regardless of political affiliation.”
Norochcholai, Sri Lanka’s largest coal-fired power station, produces thousands of tonnes of fly ash and bottom ash annually. Environmentalists say a significant portion of this waste is either inadequately stored or disposed of without proper environmental safeguards.
Withanage said coal ash contains toxic heavy metals, such as mercury, arsenic, cadmium and lead, which can contaminate soil, groundwater and nearby marine ecosystems.
“Coal ash is not ordinary waste. It is a hazardous industrial material. If it leaks into the environment, it can enter food chains and drinking water sources,” he said.
He warned that communities living around Norochcholai were already exposed to air pollution from ash particles, especially during windy conditions, leading to respiratory problems and long-term health risks.
CEJ has repeatedly called for a transparent national policy on coal ash management, including safe storage facilities, independent monitoring, and exploring environmentally responsible reuse options under strict regulation.
Withanage stressed that while some countries recycle coal ash in construction materials, Sri Lanka lacks the regulatory framework and technical safeguards to do so safely.
“Without proper standards, recycling can become another pathway for toxic exposure,” he cautioned.
Environmentalists are also urging the government to accelerate the transition away from coal towards renewable energy, arguing that continued dependence on coal will only multiply waste and health burdens in the coming years.
Norochcholai supplies nearly one-third of the country’s base-load electricity, but has remained controversial, since its commissioning, due to repeated technical failures, marine pollution concerns and its long-term environmental footprint.
“With climate change and public health risks, coal is a problem we should be reducing, not normalising,” Withanage said. “Otherwise, the ash will eventually come back to all of us.”
by Ifham Nizam
News
Akuregoda double murder: Suspected gunman in custody a duly discharged ex-soldier
The police have arrested one of the two gunmen involved in the killing of Attorney-at-Law Buddhika Mallawarachchi and his wife, at Akuregoda, on 13 February. The suspect has been identified as a legally discharged soldier.
A team of the Homagama Divisional Crime Investigation Bureau personnel apprehended the ex-soldier at Delduwa, Ambalangoda, on Saturday, around 6.20 p.m. Sources said that the suspect, identified as drug addict, had admitted that he was the one who fired the T-56 assault rifle in the attack. The other attacker used a pistol. He is still at large.
Police identified the suspect in custody as a 46-year-old resident of Baddegama. He made use of a general amnesty offered to deserters, after the conclusion of the war, to secure legal discharge. He was with a friend at Delduwa, Ambalangoda, and worked on a nearby cinnamon estate.
The suspect has been detained under PTA and the police given the power to hold him for 90 days.
The police recovered his mobile phone.
The killers arrived at Akuregoda, in a car, and fled the area after killing the couple. The ex-soldier had got off the car, near Kottawa, and then took a bus to Dehiwala, from where he proceeded to Ambalangoda.
Under interrogation, the suspect has revealed that he carried out the hit on a contract given by Karandeniye Sudda, a notorious underworld figure, who paid him Rs 1 mn and provided a quantity of heroin.
The ex-soldier is among nine persons taken into custody in connection with the ongoing investigations into the Akuregoda double murder.
Among those taken into custody are two brothers from Athurugiriya who allegedly transported one of the firearms used in the killing and provided information about the lawyer’s vehicle. Another person, identified as “Polgasowita Dila,” believed to have coordinated the Akuregoda hit, was also taken into custody during preliminary investigations.
The Police Special Task Force’s Southern Province Special Operations Unit arrested six more suspects over the weekend at Ethkandura, Kahaduwa, for aiding and abetting the double murder
Investigations have further revealed that the individual, who moved the gunman to a hotel in Pannipitiya, had fled to Thailand, via the Bandaranaike International Airport (BIA).
News
Those who hid under beds fearing Gotabaya, now talking big: Justice Minister
Justice Minister Harshana Nanayakkara said in Parliament on Friday that some Opposition politicians who had not even dared to mention the name of Gotabaya Rajapaksa during the Rajapaksa era were now acting like heroes.
Minister Nanayakkara said so when SJB Kalutara District MP Ajith P. Perera asked whether the government would reopen cases against Gotabaya Rajapaksa, who no longer enjoyed presidential immunity. The former UNP Deputy Minister asked the Justice Minister whether the NPP, as promised during the polls campaign, had resumed hearings into 42 cases filed against the Rajapaksas and others.An irate Minister Nanayakkara said that those who had been under their beds those days were now acting as if they were heroes. He refused to answer MP Perera’s question. (SF)
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