Fitch downgraded Sri Lanka’s Long-Term Local-Currency (LTLC) IDR to C from CC, indicating the onset of a sovereign local-currency debt restructuring process after parliament approved the government’s domestic debt restructuring plan. Fitch regards the proposed strategy as a distressed debt exchange, which entails a substantial reduction in terms to avoid a traditional payment default. The agency affirmed Sri Lanka’s long-term foreign-currency rating at B-.