Asia’s Highest Default Risk Spotlights Sri Lanka Debt Worry
- Nation has to service $1 billion of debt maturing in July
- Sri Lanka says arrangements made to settle July bond
A storm on the horizon past the skyline of Colombo, Sri Lanka.
Photographer: Paula Bronstein/Getty Images AsiaPacThis article is for subscribers only.
Sri Lanka’s risk premium for a default jumped, reflecting concern that the pandemic is damaging the nation’s ability to fill its foreign-exchange coffers ahead of at least $2.5 billion in dollar debt due in the next 12 months.
The nation’s five-year credit default swaps rose to 1,553 basis points on Monday, the highest since March 1. A separate gauge of one-year default probability was at 27.9%, the steepest in Asia, up from around 13% over six months ago, according to a Bloomberg model where a reading above 1.5% signifies high risk of failure to pay.