ECONOMYNEXT – Sri Lanka’s capital markets regulator said it had not renewed the license of Lanka Rating Agency (LRA), one of three credit rating agencies operating in the country, after issuing a cease and desist order against the firm in March.
"LRA is not entitled to carry on the business of assessing and evaluating or reviewing the credit-worthiness of any issue of listed securities or securities to be listed..," the Securities and Exchange Commission said
The license of a rating agency has to be renewed each year. LRA licence came up for renewal on June 30.
SEC had asked it not to issue any new ratings or review already issued rating from March 2015, until its operating processes had been brought up to scratch.
LRA had rated more than 30 firms, mainly finance companies.
LRA was at the centre of a rating shopping controversy, after several firms which were downgraded by Fitch over rising debt went to LRA.
A sale of debt by EBC, a broadcasting company, which was rated by LRA was halted and asked to get a fresh rating, last month.
A rating once issued has to be reviewed periodically. All firms rated by LRA will now have to get a fresh rating from Fitch or ICRA over the next year, an official said.