Maldives settles USD 25 million coupon payment on sukuk

The Maldives has settled the latest coupon payment of around USD 25 million on a USD 500 million senior unsecured sukuk, a day before it had been due.

The Maldivian government issued the USD 500 million sukuk or Islamic bond in 2021. It is set to mature in 2026.

The sukuk pays a semi-annual coupon, with payments scheduled for April and October.

The latest coupon payment of USD 25 million had been due on Tuesday.

In a statement on Monday, the Finance Ministry announced that the government has successfully settled the latest coupon payment.

“As of 7th October 2024, the government has successfully settled the latest coupon payment,” announced the ministry in its statement.

The Finance Ministry said that honoring debt service payments remains a key priority of the government.

“The timely settlement of this coupon payment underscores the government’s commitment to meeting its debt obligations to creditors and investors,” added the ministry.

The settlement of the coupon payment comes after credit rating agencies Fitch and Moody’s downgraded Maldives’ credit rating, citing high risk of default on its external debt obligations.

The downgrade had sparked fears that Maldives could be in the brink of the world’s first sukuk default.

Maldives has an external debt service obligation of about USD 600 million in 2025 and more than USD 1 billion in 2026.

Citing default risks, Moody’s has downgraded Maldives’ credit rating from CAA1 to CAA2, while Fitch downgraded the country’s credit rating from CCC+ to CC.

However, the Maldives Monetary Authority (MMA) has expressed confidence in the capability of the government to meet its external debt obligations, citing improvements in its foreign exchange reserves.

The Maldivian government previously said it plans to refinance USD 500 million (MVR 7.7 billion) of the debt repayment obligations due in 2026. It has also rolled out reforms, including amendments to its foreign exchange regulations.