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Fitch changes Sri Lanka domestic rating scale after sovereign downgrade

ECONOMYNEXT – Sri Lanka’s (lka) rating scale used to assess the relative creditworthiness of domestic issuers after the sovereign rating was downgraded will also be changed or r-ecaliberated, after the sovereign rating was downgraded, Fitch Ratings said.

Fitch had downgraded Sri Lanka’s sovereign rating from ‘B’ to ‘B-‘. Sri Lanka companies that had global ratings were also downgraded.

Now the domestic (lka) rating will also be changed.

“The recalibration will result in rating actions for some issuers with Sri Lankan national ratings.
These rating revisions will be announced soon,” the rating agency said.

Sri Lanka was downgraded by both Fitch and Standard and Poor’s after a tax cut or ‘fiscal stimululs’ undermined state finances in January and money printing in March and April triggered forex shortages leading to concerns over the ability to repay debt.

The full statement is reproduced below:

Fitch Recalibrates Sri Lanka National Rating Scale

Fitch Ratings-Singapore-28 May 2020: Fitch Ratings says today that it has recalibrated its Sri Lanka
National Rating scale to reflect changes in the relative creditworthiness among Sri Lankan issuers
following Fitch’s downgrade of the country’s sovereign rating to ‘B-‘ from ‘B’ on 24 April 2020. The

Outlook on Sri Lanka’s Long-Term Issuer Default Rating is Negative.

The recalibration will result in rating actions for some issuers with Sri Lankan national ratings.
These rating revisions will be announced soon.

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.