Rating Call

The Central Bank plans to hire Fitch Ratings International to give a sovereign rating for the countrys debt.
A sovereign rating serves as an indication of a countrys ability to repay its debt and is a key requirement to raise money from the international capital markets.rn

rnThe bank is in the process of securing the services of a lquote rating advisory, usually an investment bank, to help interact with the rating agency. rn

rnCentral Banks Deputy Governor, W A Wijewardene says the rating process will be conducted in two stages.rn

rnFitch International, which has a local presence through Fitch Ratings Lanka, is expected to announce the rating first next January, Wijewardene told reporters on Tuesday.rn

rnThe bank will thereafter seek a sovereign rating from the other two international credit rating agencies endash Moodys Investor Services and Standard & Poor.rn

rnSri Lankas total debt as at end-July was Rs. 1.76 trillion or US$ 18.6 bn, up from Rs. 1.60 trillion in 2002. Total debt to GDP ratio stands at about 110 percent at present.rn

rnAbout 40 percent of loans are secured at concessionary rates from foreign donors.rn

rnOn Monday, the government obtained US$ 100 mn through a five-year floating rate note from Citibank. The issue was its largest-ever foreign commercial borrowing.rn

rnIn June, the government signed up for a US$ 33 mn loan from HSBC, to be paid over a 13 ‘bd year period. The HSBC issue is the countrys longest ever foreign commercial borrowing.rn

rnFitch Ratings Lanka said last year that Sri Lankas sovereign rating is on par with its neighbour India, because of its record of fiscal discipline and never having defaulted on a payment. rn

rnFitch put Sri Lankas rating at between B-plus and BB-plus, in the same range as India, but below investment grade of BBB. rn

rnIndias local-currency debt is rated BB plus by Fitch, Ba2 by Moodys Investors Services and BB+ at Standard & Poors, all of which are junk ratings. Its foreign-currency debt is rated BB by Fitch, Ba1 at Moodys, and BB by S&P. rn