Some Sri Lanka firms could be hit on import controls as reserves fall: Fitch island.lk - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from island.lk Daily Mail and Mail on Sunday newspapers.
Friday July 23, 2021 8:41 am
Friday July 23, 2021 8:41 am
ECONOMYNEXT – Some Sri Lanka firms could be hit while firms in essential goods may be less affected and import substitution firms could benefit if import controls are tightened on weak external finances, Fitch, a rating agency said.
“…Sri Lanka sovereign’s weak external finances will affect corporates importing non-essential finished goods such as consumer durables more than corporates importing essential finished goods such as pharmaceuticals, food or clothing,” Fitch said.
“At the same time, we believe restrictions are less likely in the near term on the importation of raw materials for the domestic manufacture of essential products such as personal care, or for those industries serving as import-substitutes such as tyre and footwear manufacturers.”
Fitch Ratings has affirmed Sri-Lanka based footwear and tire manufacturer and retailer DSI Samson Group (Private) Limited (DSG) at ‘AA(lka)’. The Outlook is Stable.
The affirmation and Stable Outlook reflect Fitch’s belief that DSG will maintain sufficient liquidity and healthy operating performance in the next one to two years such that its leverage and fixed-charge coverage will remain adequate for its rating.
The ‘AA(lka)’ rating reflects DSG’s market leadership in the highly fragmented and competitive footwear retailing space, which is supported by an island-wide network of 200 outlets and its in-house manufacturing. DSG is also a market leader in the domestic two-wheeler and three-wheeler tire segments.
Fitch Ratings has taken rating action on Sri Lankan non-financial corporates following the recalibration of its Sri Lankan National Rating scale to reflect changes in the relative creditworthiness among the country’s issuers following the downgrade of the sovereign rating to ‘CCC’ from ‘B-‘ on 27 November 2020. Fitch typically does not assign Outlooks or apply modifiers to sovereigns with a rating of ‘CCC’ or below. For details, see “Fitch Ratings Recalibrates its Sri Lankan National Rating Scale”, dated 22 December 2020, at www.fitchratings.com/site/pr/10147729.
The recalibration of our Sri Lankan National Rating scale has resulted in rating affirmations in some cases and the assignment of revision ratings to others. Revision ratings are used to modify ratings for reasons that are not related to credit quality.