June 18, 2014 (LBO) – Fitch Ratings said an ‘A-(lka)’ national fund credit rating given to Ceylon Income Fund in Sri Lanka has been confirmed.
The negative modifier in the fund’s ‘A-(lka)’ National Fund Credit Rating reflects Fitch’s view that the fund is moderately concentrated with a top-five issuer concentration of around 56% of the portfolio as of May 2014. The fund’s investment guidelines limit it to investment-grade rated issuers only. The majority of issuers in the portfolio are rated in the ‘A(lka)’ and ‘BBB(lka)’ rating categories. Around 11% of securities in the portfolio were subject to Rating Outlook Negative as of May 2014, but no securities were subject to Rating Watch Negative.
In Fitch’s opinion, the fund is moderately concentrated. Consistent with its rating criteria, Fitch has, therefore, conducted deterministic stress tests on the portfolio. Based on its analysis, Fitch believes the fund has a limited capacity to withstand negative rating migration before it would be downgraded to the ‘BBB(lka)’ National Fund Credit Rating Category. The negative modifier in the fund’s ‘A-(lka)’ National Fund Credit