Fitch Ratings and S&P Global Ratings on July 13 downgraded Suriname to default status after bondholders agreed to change the amortization schedule of the sovereign's 2023 notes.

Fitch Ratings downgraded the country's long-term foreign-currency issuer default rating to RD from C, while S&P Global Ratings downgraded long-term foreign currency sovereign credit rating to SD from CCC+.

S&P Global ratings also noted that its outlook on the country's local currency credit rating is negative.

The downgrades come after bondholders recently agreed to push back the first principal payment on the debt to Dec. 30 from June 30. Both rating agencies noted that the change in terms was made to prevent a traditional default after the grace period lapsed July 10. For both rating agencies, the move constitutes a distressed debt restructuring.

Fitch previously had said it considered the Surinamese government's issuance of a "consent solicitation" looking to defer the June 30 principal payment on its bonds as the start of a default process. An agreement from a majority of the bondholders to Suriname's request would represent a distressed debt exchange, the rating agency noted at the time.

Fitch noted that there is a high risk of a wider restructuring of Suriname's foreign currency bonds, due to the government's high debt burden, foreign currency shortage and pressures on financing conditions.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.