Sri Lanka domestic ratings revamped by Fitch after downgrade to CCC
ECONOMYNEXT – Sri Lanka ratings of a number of issuers would be changed with a re-caliberation of the local rating scale that came in the wake of a sovereign downgrade to ‘CCC’ from ‘B-‘ Fitch Ratings said.
“The recalibration will result in rating actions for some issuers with Sri Lankan national ratings,” Fitch Ratings said.
When Sri Lanka was downgraded to ‘B-‘ local ratings of several domestic companies went to ‘AAA (lka)’.
At CCC levels the highest local rating corresponds to ‘AA-(lka)’ according to the re-caliberated domestic scale.
The ceiling usually applies to banks and firms with high exposure to the government. Firms with standalone credit strength could have better ratings, at certain levels.
Several Sri Lanka firms had ‘AAA(lka)’ ratings after the last sovereign downgrade.
The CCC level which carries ‘Substantial Credit Risk’ under Fitch definitions, indicates that ‘default is a real possibility’.
It is just above ‘CC’ where ‘default of some kind appears probable’. At that level domestic ratings also fall below B.