Fitch Ratings announced a downgrade of Sri Lanka's Long-Term Local-Currency (LTLFC) Issuer Default Rating (IDR) from 'C' to 'RD' (Restricted Default). In a recent domestic debt exchange, local-currency bond ratings involved in the exchange dropped to 'D,' while those not part of the exchange remained at 'C.' The Long-Term Foreign-Currency (LTFC) IDR was affirmed at 'RD,' and all foreign-currency bond ratings were affirmed at 'D,' with all issue ratings subsequently withdrawn. The exchange of T-bonds, as part of a debt optimization plan, is considered a distressed debt exchange (DDE) by Fitch due to changes in terms. Sri Lanka also remains in default on foreign currency obligations and is undergoing debt restructuring. The country's ESG Relevance Score is '5' for governance factors.