Credit ratings agency Moody's on Monday raised Sri Lanka's long-term foreign currency issuer rating to 'Caa1' from 'Ca' with a stable outlook, after the country's creditors approved a $12.55 billion debt overhaul last week.

Moody’s Ratings upgraded Sri Lanka’s credit rating, days after the nation concluded debt restructuring of its dollar bonds, which reduces the risk of default on future notes.

Moody's rating hike action comes after the review, which started last week. The rating upgrade to ‘Caa1’ marks a stable outlook for the island nation of Sri Lanka, reported Reuters.

Sri Lanka's consumer price inflation dropped to minus 1.7% year-on-year in November after easing to minus 0.7% in October, official data showed on Monday, as the country posted a strong rebound from its worst financial crisis in decades.

Sri Lanka’s economy grew 5.5% last quarter, boosting sentiment as the nation looks to finalize debt restructuring that’s crucial to keep the International Monetary Fund’s aid flowing.