Sri Lanka has third highest debt-rollover ratio in 2015

COLOMBO (EconomyNext) – Sri Lanka has the third highest debt-rollover ratio measured against gross domestic product this year, after Japan and Pakistan, among Asia-Pacific sovereigns rated by Standard & Poor’s Ratings Services.

Pakistan and Japan will face the highest debt-rollover ratios, including short-term debt, of rated sovereigns, reaching 25 percent and 75 percent of GDP this year, the rating agency has calculated.

Sri Lanka was third with a debt-rollover ratio of 17.1 percent of GDP, S&P’s said in a new report.

Debt-rollover ratios for infrequent issuers with small but lumpy debt obligations can be very low if they have little or no debt maturing in a given year and if they do not have a significant amount of short-term debt.

The rollover ratios of sovereigns that have a higher proportion of official debt tend to be lower, because official debt typically has longer maturities than commercial debt, S&P’s said.

Given the size of Japan’s outstanding debt, its government debt issuance dominates the statistics for the region with outstanding commercial debt issued by the Japanese government amounting to about 70 percent of the total in the Asia-Pacific region at the end of 2015.

The rating agency said Japan has been gradually extending the maturity of its outstanding debt and in 2015 intends to increase the average maturity of its bond issuance to nine years, six months more than in the previous fiscal year.

"The Japanese government is aware of the refinancing risk of its large debt stock, as reflected by the rollover ratio."

Sri Lanka’s total commercial debt (long and short term) has been rising steadily in the last three years, forecast at 48.5 billion US dollars this year, up from 39.2 billion dollars in 2013 and an estimated 45.4 billion dollars in 2014.

Its rollover ratio as a percentage of total debt is 23.4 percent.

Commercial debt accounts for 77 percent of the island’s total debt of which foreign currency debt is 45 percent, according to S&P data. Short-term debt is 14.3 percent of total debt.