So far, the bank has mandated Fitch Ratings Inc. to give Sri Lanka its first country rating. Fitch was selected for its local presence through Fitch Ratings Lanka Ltd. rn
rnThe mandate for the second rating from either Moodys Investor Services or Standard & Poors will be given once the bank selects a rating advisor.rn
rnThe banks Deputy Governor, W A Wijewardene says the government is sticking to its plan seeking a sovereign rating, despite a political crisis which is jeopardising a peace bid that has helped bring about an economic recovery.rn
rnOngoing political tussle and uncertainty hovering over the peace process, may have a negative effect on Sri Lankas sovereign rating.rn
rn"We are going ahead with the process as we must learn to distinguish the economy from political shake ups. Hopefully, we will have our first rating in place by the first quarter of next year," Wijewardene told a media briefing on Wednesday.rn
rnThe Central Bank, which is acting as the governments agent, is currently evaluating proposals from six financial institutions keen to take on an advisory role in the rating process.rn
rnHSBC, Standard Chartered Bank, Citibank, Deutsche Bank, UBS Warburg and JP Morgan sent their proposals in November.rn
rnA few investment banks have made presentations to the Central Bank, and the others are expected to follow suit next month.rn
rnWijewardene says a country rating is important to raise investor awareness on Sri Lankas improving economic fundamentals. rn
rnldblquote We dont plan to use the rating to borrow in the international markets for the moment, but will seek a third rating when we eventually decide to tap the debt markets, dblquote he said.rn
rnSri Lankas total debt as at end-Sept. was Rs. 1.002 trillion up from Rs. 923.4 bn in 2002. Total debt to GDP ratio stands at about 110 percent at present. rn
rnAbout 40 percent of loans are secured at concessionary rates from foreign donors.rn
rnFitch Ratings Lanka said last year that Sri Lankas sovereign rating is on par with its neighbour India, because of its record of fiscal discipline and never having defaulted on a payment. rn
rnFitch put Sri Lankas rating at between B-plus and BB-plus, in the same range as India, but below investment grade of BBB. rn
rnThe rating was expected to be higher, with higher economic growth and a steady inflow of foreign funds. But the current domestic situation may change that perception.rn
rnIndias local-currency debt is rated BB plus by Fitch, Ba2 by Moodys Investors Services and BB+ at Standard & Poors, all of which are junk ratings. Its foreign-currency debt is rated BB by Fitch, Ba1 at Moodys, and BB by S&P.rn
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-LBO Newsdesk: LBOEmail@vanguardlanka.comrn
The Central Bank says it will go for a sovereign rating from a third rating agency when the country eventually taps the foreign debt markets.