Sri Lanka was downgraded to selective default by S&P Global Ratings on Monday after the government failed to meet an interest payment on some of its dollar bonds last week. 

The company lowered the nation’s long-term foreign currency debt rating to SD from CC citing the missed coupon payment on its US$1.25 billion international sovereign bonds maturing in 2023 and 2028 on April 18. While the notes have a 30-day grace period, S&P doesn’t expect the government to meet the obligation.

“Sri Lanka’s debt restructuring process is likely to be complicated and may take an extended period of time to complete,” the firm’s analysts Andrew Wood and Rain Yin wrote in the statement. The SD score means the country has defaulted on a “specific issue or class of obligations” and is just one tier above default. 

The government said on April 12 it would halt payments on foreign debt to preserve its dwindling dollar stockpile for essential food and fuel imports. Since then, Fitch Ratings downgraded the long-term foreign currency to C, one step above default, and Moody’s Investors Service lowered its score to Ca from Caa2. 

Sri Lanka was supposed to pay US$36 million in interest on a bond maturing in 2023 and US$42.2 million on a 2028 note last week, its first major bond obligations since the announcement of suspended payments, according to Bloomberg data. Failure to keep up with obligations after the grace period would mark the first blemish on the nation’s debt record since its independence from Britain in 1948. BLOOMBERG