ICRA Lanka’s Rating Services

Drawing on the strength and experience of the parent, ICRA Lanka provides a range of rating services. With the current demand, Issuer/Entity Rating Service is a key product.
    
ICRA Lanka’s Issuer ratings would provide an opinion on the general creditworthiness of the rated entities in relation to their senior unsecured obligations. ICRA Lanka’s Issuer Ratings are not specific to any particular debt instrument issued by the rated entities. In an increasingly globalised environment, these issuer ratings could be of immense help to organizations in negotiating with prospective lenders, contractors, consultants, counter-parties, collaborators, vendors, creditors and other stakeholders who need to form an opinion about the overall credit quality of the company. ICRA Lanka also rates rupee denominated debt instruments issued by commercial banks, non-banking finance companies, financial institutions, manufacturing and service companies, among others. ICRA Lanka also rates structured obligations and sector-specific debt obligations. The other services offered include Corporate Governance Rating, Stakeholder Value and Governance Rating, Credit Risk Rating of Debt Mutual Funds, Rating of Claims Paying Ability of Insurance Companies, Project Finance Rating, and Line of Credit Rating.

What ICRA Lanka's Ratings Convey

ICRA Lanka’s credit ratings are symbolic representations of its current opinion on the relative credit risks associated with the rated debt obligations/issues. These ratings are assigned on a Sri Lankan (that is, national or local) credit rating scale for Rupee (local currency) denominated debt obligations. ICRA Lanka ratings may be understood as relative rankings of credit risk within Sri Lanka. ICRA Lanka ratings are not designed to enable any rating comparison among instruments across countries; rather these address the relative credit risks within Sri Lanka.

Unless stated otherwise, ICRA Lanka’s ratings (other than Structured Finance Ratings) in the investment grade convey the relative likelihood of default, that is, the possibility of the debt obligation not being met as promised. All other ratings, including Structured Finance Ratings, reflect both the probability of default and the severity of loss on default, that is, the expected loss against the rated debt obligation.

Credit rating apart, ICRA Lanka also assigns Corporate Governance Ratings, besides Performance Ratings, Gradings and Rankings to mutual funds, construction companies and hospitals, which have different meanings. Users are advised to refer to ICRA Lanka’s service brochures for details.

Limitations of ICRA Lanka Ratings

  • ICRA Lanka ratings are only an opinion on the relative ranking of credit risk. Even the debt obligations rated in the highest category carry a certain degree of credit risk, although such risk would be the lowest when compared with the credit risks associated with obligations rated in the lower rating categories.

  • ICRA Lanka rating categories group debt obligations with similar but not necessarily identical credit risks.

  • ICRA Lanka ratings convey only the relative credit risk; that is, they do not reflect the other investment risks arising out of changes in market conditions, viz. interest rates or liquidity.

  • ICRA Lanka ratings are not always constant and are subject to change. ICRA Lanka’s credit ratings reflect the issuers’ inherent credit quality, which in many cases may not remain constant at all times. While ICRA Lanka in its analysis endeavours to incorporate the factors that impact the issuers’ prospective credit quality, there may be situations in which the actual developments would significantly differ from ICRA Lanka’s expectations. Such changes in turn may warrant an upward or downward revision in the ratings previously assigned. Given this possibility, all ICRA Lanka ratings are subjected to regular monitoring or surveillance. Users of ICRA Lanka’s ratings are advised to regularly refer to ICRA Lanka’s rating releases, publications and/or website (www.icralanka.com) for rating updates.

  • For assigning ratings, ICRA Lanka relies on all relevant information (such as audited statements) made available to it by the issuer company, as well as on other sources of information (opinions of legal and other experts, for instance) that ICRA Lanka considers reliable. While ICRA Lanka takes reasonable care to ensure that all such information is reliable, it makes no representation or warranty, express or implied, as to the accuracy, authenticity, timeliness or completeness of any such information. Further, ICRA Lanka ratings are not to be construed as recommendation to buy, sell, or deal in the rated instruments.