Fitch noted that it typically does not assign outlooks or apply modifiers to sovereigns with a rating of ‘CCC’ or below.
The re-calibration 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.
The Government had earlier refuted down grading by Fitch Ratings saying it fails to recognize the robust policy framework of the new Government.
The Finance Ministry noted that it observed with disappointment the rating action by Fitch Ratings.
The ministry expressed concerns about Sri Lanka’s external debt repayment capacity over the medium-term, financing options and debt sustainability risks.
This was done at a time when its medium term policy framework in its Budget 2020 was just announced, the ministry said.
The Finance Ministry noted that Fitch Ratings builds up its argument based on the ‘existing financing model’, thus adopting a backward looking approach.
Fitch Ratings has re-calibrated its Sri Lankan National Rating scale to reflect changes in the relative creditworthiness among Sri Lankan issuers.This follows Fitch’s downgrade of the country’s sovereign rating to ‘CCC’ from ‘B-‘ on 27 November 2020.
The Government also reaffirmed to foreign investors that it has continuously over the past several years remained willing and able to meet its debt obligations, as it has done impeccably in the past.
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