Ceylon Asset Management replies to Fitch on income fund rating


Aug 27, August (LBO) – Ceylon Asset Management, commenting on the Fitch Rating press release which maintained the A (lka) credit quality rating of the Ceylon Income Fund on rating watch negative (RWN), says the LRA suspension by the SEC and the absence of an alternative process is outside the control of the fund.

“The LRA suspension by the SEC and the absence of an alternative monitoring process sought by Fitch Ratings, is beyond the control of the fund, the fund manager and the underlying listed company security. 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 said.

Earlier Fitch said the maintenance of the RWN is driven by an increase in the proportion of the fund rated only by Lanka Rating Agency (LRA) following redemption activity in the fund. The Securities and Exchange Commission of Sri Lanka issued a statement in July 2015 saying that LRA is not entitled to assess, evaluate or review the creditworthiness of listed securities or securities to be listed.

The fund’s Weighted Average Rating Factor was previously consistent with a National Fund Credit Quality Rating in the ‘A(lka)’ category. The fund primarily invests in corporate debt instruments and is managed by Ceylon Asset Management.