S&P drops Seychelles to SD

Standard & Poor's said it lowered the foreign-currency sovereign ratings on the Republic of Seychelles to SD from CCC/C and the $230 million 9 1/8% global bonds due Oct. 3, 2011 to CCC- from CCC.

The agency downgraded the long-term local-currency rating to B from B+ and affirmed the B short-term local-currency rating.

The outlook on the local-currency ratings is negative.

S&P said the actions follow nonpayment of principal due on July 1 for some unrated privately placed €54.75 million amortizing notes due 2011 and the subsequent resolution of noteholders to accelerate payment.

The government's actions raise questions about its debt-management policies and heighten concerns about its capacity to service other foreign-currency debt, S&P said, and its foreign-exchange difficulties are likely to significantly increase its reliance on domestic markets to finance its budget deficit.

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