India’s government is ready to offer the Maldives emergency financial support to help ease the island nation’s financial woes as risks of the first sukuk default loom, people familiar with the matter revealed to Indian media outlets on Saturday.

The Economic Times of India reported that the Maldives can immediately tap $400 million available under the Reserve Bank of India’s currency swap program that’s open to regional countries, Indian officials said, asking not to be identified before a final decision is made. The country can also seek long-term loans under a $800 million line of credit extended to the government in 2019, the people said.

They further reported that it is unclear if the Maldives government has officially asked for India’s help yet. However, the matter is likely to be discussed during President Mohamed Muizzu’s visit to India in coming weeks, the people said.

Bloomberg previously reported that the dollar-denominated sukuk bonds due 2026 dropped below 70 cents on the dollar, a record low. With double-digit losses this month, the debt is the worst performer on the Bloomberg EM Sovereign Total Return Index.

The Maldivian government faces USD 50 million in sovereign external debt-servicing obligations due in the fourth quarter of this year, in addition to USD 64 million in publicly guaranteed external debt. Fitch expects the Maldives' current account deficits to remain high in the short to medium term due to extensive public investment and heavy dependence on imports of food, energy, and capital goods.

They further added that the total external debt servicing will increase to USD 557 million in 2025 and exceed USD 1 billion in 2026, including repayment of a USD 500 million sukuk.

The Maldivian foreign reserves currently stand at USD 444 million with usable reserves at USD 61 million.