regulatory or accounting forbearance.
We may resolve and affirm the banks’ ratings if we think risks from funding and capital stresses have abated, at both the individual bank and the sector level, to the extent that we believe the banks’ ability to service obligations in local and foreign currency is not hindered and/or banks are able to continue as a going concern and avoid failure.
Although the government’s domestic debt treatment announcements go some way towards resolving uncertainties over Sri Lankan bank ratings, many risks remain. It is still unclear, for example, whether the government’s proposals have received support from the sovereign’s key external creditors. If not, the risk of further domestic debt restructuring could linger, resulting in further instability for the banking sector.
–Fitch Ratings–