Fitch Withdraws Rating on Ceylon Income Fund; Ceylon Asset Management responds


Sep 14,2015 (LBO) – Fitch Ratings said it has withdrawn Ceylon Income Fund’s National Fund Credit Quality Rating of A(lka)’ saying there is no National Volatility Rating assigned to the fund, which is managed by Ceylon  Asset Management.

Following the Securities and Exchange Commission of Sri Lanka not renewing the license of Lanka Rating Agency (LRA), in July 2015, Fitch placed the fund on Rating Watch Negative. The proportion of the fund’s assets that used to be rated by LRA was 32 percent at 9 September 2015, Fitch said.

“Fitch has withdrawn the rating due to insufficient information as assets previously rated by LRA are no longer monitored. Accordingly, Fitch will no longer provide ratings for Ceylon Income The fund’s Weighted Average Rating Factor was previously consistent with a National Fund Credit Quality Rating in the ‘A(lka)’ category.” Fitch said in a statement.

The fund primarily invests in corporate debt instruments. Fitch continues to rate the Ceylon Dollar Bond Fund (BB-/V5), which is managed by Ceylon Asset Management.

Ceylon Asset Management, responding to the withdrawal of the of the rating, said these assets continue to be listed on the Colombo Stock Exchange despite the LRA suspension by the SEC.

Under the CSE listing rules it is mandatory for listed debentures to have a valid rating in order to be listed on the CSE, Ceylon Asset Management told Lanka Business Online.

“Ceylon Asset Management highlights that the bonds are of investment grade, and the LRA suspension is beyond the control of the fund, the fund manager and the underlying listed company,” the company said.

“Ceylon Asset Management assures investors of the Ceylon Income Fund that the fund continues to invest in investment grade securities that are listed in the CSE.”