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Bond Market News
Maldives Downgraded to CCC+ by Fitch
June 27, 2024
Maldives has been downgraded by a notch to CCC+ from B- by Fitch. The downgrade reflects increased risks associated with the country’s worsening external financing and liquidity metrics. Weakening foreign-reserve buffers and rising external government debt increase the challenges for the new government to meet its substantial upcoming external debt-servicing obligations, and keep the currency peg to the dollar. According to Fitch, Maldives will continue to rely on bilateral and multilateral financing support facilitated by the country’s geopolitical strategic importance. In terms of external support, the accumulation of foreign-currency tourism taxes in the Sovereign Development Fund, could also help finance part of the upcoming debt servicing. Fitch expects the government to reduce the external financing requirement over the medium term through fiscal consolidation, but is likely to face large external financing hurdles in 2025 and 2026.
Maldives’ 9.875% 2026s traded stable at 93.9 , yielding 13.83%
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