Fitch Ratings today downgraded the rating on SriLankan Airlines Limited’s (SLA) US dollar-denominated government-guaranteed bonds to ‘B+’ from ‘BB-‘, Sri Lanka Insurance Corporation (SLIC) to ‘B+’ from ‘BB-‘ and Sri Lanka Telecom to ‘B+’/Negative on Sovereign Downgrade.

This follows the downgrade of Sri Lanka’s Long-Term Foreign and Local-Currency Issuer Default Ratings to ‘B+’ with a Negative Outlook (see ‘Fitch Downgrades Sri-Lanka to ‘B+’; Outlook Negative’, dated 29 February 2016).

Meanwhile, Fitch Ratings has downgraded the Issuer Default Ratings (IDR) of Bank of Ceylon (BOC) and National Savings Bank (NSB) to ‘B+’ from ‘BB-‘ and downgraded the IDRs of People’s Leasing & Finance PLC’s (PLC) IDRs to ‘B’ from ‘B+’. The IDRs of DFCC Bank PLC (DFCC) were affirmed at ‘B+’. The Outlooks on all the IDRs are Negative to reflect the Negative Outlook on the sovereign.

Fitch took the rating actions after it downgraded the Sri Lankan sovereign to ‘B+’ from ‘BB-‘ and assigned a Negative Outlook on 29 February 2016. (see “Fitch Downgrades Sri Lanka to ‘B+’; Outlook Negative” at

Fitch has also assigned Recovery Ratings of ‘RR4’ to the US dollar senior unsecured notes issued by BOC and NSB to reflect average recovery prospects. At the same time Fitch affirmed the Recovery Rating on DFCC’s US dollar senior unsecured notes at ‘RR4’. The National Ratings of BOC, NSB, DFCC and PLC have not been reviewed at this time.

Fitch maintains a stable sector outlook for the Sri Lankan banking sector for 2016 as they do not expect the sector’s credit profile to deteriorate materially even though operating conditions could become more challenging. The operating environment remains a key rating driver for the Sri Lankan banking sector given its potential volatility.