Fitch downgrades SLT & CEB, upgrades Lion Brewery on rating scale revision

Feb 18, 2019 (LBO) – Fitch Ratings has taken rating action on non-financial corporates following the recalibration of its National Rating scale to reflect changes in the relative creditworthiness among the country’s issuers following the downgrade of the sovereign rating.

Accordingly, the National Long-Term Ratings of Sri Lanka Telecom, Ceylon Electricity Board and DSI Samson Group has been downgraded while the rating of Lion Brewery (Ceylon) has been upgraded.

The downgrade of SLT’s National Long-Term Rating to ‘AA+(lka)’ from ‘AAA(lka)’ reflects the downgrade of the sovereign’s Long-Term Foreign-Currency Issuer Default Rating to ‘B’ from ‘B+’.

CEB’s National Long-Term Rating downgrade considers the Sri Lankan sovereign’s weaker ability to extend support, reflected in the downgrade of the sovereign’s ratings.

The rating downgrade reflects Fitch’s expectations that DSG’s net leverage – defined as lease adjusted debt net of cash/operating EBITDAR – is likely to remain above 4.5x over the medium term.

The upgrade of Lion’s rating reflects the recalibration of the national scale ratings as well as our view that Lion will maintain its leverage – net adjusted debt / EBITDAR – in line with an ‘AA-(lka)’ rating.

National scale ratings are a risk ranking of issuers in a particular market designed to help local investors differentiate risk.

Sri Lanka’s national scale ratings are denoted by the unique identifier ‘(lka)’. Fitch adds this identifier to reflect the unique nature of the Sri Lankan national scale.

National scales are not comparable with Fitch’s international ratings scales or with other countries’ national rating scales.

Full statement

Fitch Downgrades 3 Non-Financial Corporates, Upgrades 1 on Sri Lanka National Rating Scale Revision Feb 2019