Fitch places Ceylon Income Fund on negative rating

Fitch Ratings has placed the National Fund Credit Quality Rating assigned to the Ceylon Income Fund of ‘A(lka)’ on Rating Watch Negative.

There is uncertainty regarding the credit quality of a significant portion of the funds’ underlying assets,Fitch said.

This action comes after the Securities and Exchange Commission of Sri Lanka (SEC) did not renew the licence of Lanka Rating Agency (LRA), which rated 32% of Ceylon Income Fund’s assets as at end-May 2015.

The SEC on July 1,2015 issued a statement saying that LRA is not entitled to assess, evaluate or review the creditworthiness of listed securities or securities to be listed.

The fund’s Weighted Average Rating Factor was previously consistent with a National Fund Credit Quality Rating in the ‘A(lka)’ category.

The fund primarily invests in corporate debt instruments and is managed by Ceylon Asset Management.

The National Fund Volatility Rating is ‘V-NR’.

The Rating Watch Negative will be resolved if the assets that were previously rated by LRA reduce materially or if these assets are rated by another rating agency.

Fitch will review the Rating Watch in one month’s time.
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Fitch rates PABC senior debt final ‘BBB(lka)’

Fitch Ratings has assigned Pan Asia Banking Corporation (PABC) issue of senior unsecured debentures of up to Rs 4.0b a final National Long-Term rating of ‘BBB(lka)’

The final rating is the same as the expected rating assigned on June 17, 2015, and follows the receipt of documents conforming to information already received.

The debentures will have maturities of three and four years with a combination of fixed-rate and floating-rate coupons. PABC expects to use the proceeds to reduce structural maturity mismatches, diversify the funding mix and secure medium-term funding.

The debentures are to be listed on the Colombo Stock Exchange.
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After Cairn exit global giant Total, Shell and ExxonMobil want to explore Lankan oil

Following the exit of Cairn India from offshore oil exploration in Sri Lanka’s Mannar basin, three major oil companies have expressed interest in continuing Cairn’s work.

Power and Energy Ministry Secretary B.M.S. Batagoda said bids had been received from three global oil companies - Total, Shell and ExxonMobil - for exploration in the Mannar Basin.

The bids had been received after an open tender was called when Cairns Lanka decided to end its operations in Sri Lanka.

Cairn Lanka, a subsidiary of Cairn India Ltd. (CIL), one of the leading independent exploration and production companies globally, announced in April that a nearly 50% drop in crude oil prices had forced Cairn India to exit its operations in Sri Lanka.

Following Cabinet approval, the Government has floated bids to select an investor to commercially develop the natural gas deposits found in the two wells of block SL 2007-01-001 in the Mannar Basin.

According to Dr. Batagoda, the two wells in the basin had yielded two trillion cubic meters of natural gas which would be sufficient to meet the demand of the country for ten years. Furthermore, the natural gas would be used to run the power plants at Kerawalapitya and Kelanitissa

The new tender will be awarded for 20 blocks in the Mannar basin while a separate tender will be called for work on the data obtained by Cairns during its exploration.

Meanwhile, the Cabinet has decided to give the tender for the exploration for oil and natural gas off the eastern coast of Sri Lanka to Total, a leading French company, the Sunday Times reported.

The company will gain exclusive rights for scanning, data collection and mapping in the seas off the eastern coast.

Dr. Batagoda said that this would be the first time that gas and oil exploration will take place in the eastern seas. 
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Sri Lanka sells US$165 million in floating rate bonds

ECONOMYNEXT - Sri Lanka has sold 165.25 million dollars of floating rate bonds which includes 110 million US dollars of 1 year and 3 month bonds at 342.99 basis points above the 6-month London Interbank Offered Rate.

The debt office also sold 55.25 million US dollars of 2 year bonds which will pay 365.36 basis points above the 6-month Libor.

The securities styled Sri Lanka Development Bonds are aimed at the domestic markets but non-residents could also buy them. The debt office said it received bids of 113.25 million dollars for 15 month bonds and 59.25 million in bids for 2 year bonds.

About 170 million dollars of floating rate bonds are coming up for rollover this month.

Sri Lanka sells Rs60bn in 4 and 6-year rupee bonds

ECONOMYNEXT - Sri Lanka has sold 27.6 billion rupees of 4-year bonds and 23.0 billion rupees of 6-year bonds and rejected bids for 10-year bond which were also offered, the state debt office said.

The 4-year bonds maturing on 01.07.2019 were sold at a weighted average yield of 8.19 percent.

Similar 4-year bonds were last auctioned on May 12 at 8.15 percent. The bonds were quoted at 8.15/20 percent in the secondary market after the auction, dealers said.

The 6-year bonds maturing on 01.08.2021 were sold at an average yield of 8.87 percent.

They were quoted around 8.83/78 percent in the market.

A close maturity of 15.10.2021 bonds were last auctioned at 9.08 percent on July 15.

Sri Lankan shares slip on profit-taking, month-end settlements

Sri Lankan shares fell on Monday from the previous session's two-months high, snapping a three-session gaining streak due to profit-taking and month-end settlements.

The main stock index ended lower 0.3 percent, or 21.82 points, at 7,247.23, slipping from its highest since May 25 hit on Friday.

Hopes of improved corporate earnings and political stability after the parliamentary polls next month have boosted investor sentiment.

"The market has run out of steam, with a bit of profit-taking and month-end settlements, but there was not much of selling pressure," said Dimantha Mathew, a research manager at First Capital Equities (Pvt) Ltd.

Turnover was 1.09 billion rupees ($8.15 million), just above this year's daily average of 1.06 billion rupees.

Foreign investors were net buyers of 64.9 million rupees on Monday, extending the net foreign inflows during the past three sessions to 1.07 billion rupees.

Analysts also expect Sri Lankan companies to post strong results for the April-June quarter.

Ceylon Cold Stores Plc fell 2.74 percent, while Aitken Spence Plc fell 2.10 percent. 

($1 = 133.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Harsha regrets delay but vows swifter action against stock market Mafia

By Madushka Balasuriya

Economic Affairs Deputy Minister Dr. Harsha de Silva, once a vocal critic against the stock market mafia, on Friday expressed disappointment over the progress in punitive action but vowed justice would be meted out more swiftly under a permanent government post elections.

“Numerous allegations have been made of stockbrokers complicit with investors manipulating the market – pumpingshares, dumping them on various State institutions and so on. I am disappointed that we have still not made sufficient progress in making sure that we have done the expected job in dealing with those people who acted in ways that contravened the Securities and Exchange Commission’s Act,” said De Silva.

He was speaking as Chief Guest at the Certificate and Diploma Awards Ceremony 2015, organised by the Capital Market Education and Training (CMET) and the Securities and Exchange Commission of Sri Lanka on Friday.

“What happened to those who breached that Act? Where are the files, cases filed against these people?” asked the Deputy Minister, referring to the one of the more pronounced failures of the new regime in bring white collar criminals to justice, adding that it had allowed some to say that “none of these allegations were ever true”.

De Silva called on the SEC, the Colombo Stock Exchange and Attorney General’s Department to see how they could “speed up” this process, so as to “rebuild the confidence in the market”.

He assured that come 17 August, the UNF coalition would bring to book those who had so far evaded justice.

“If people think they don’t have a fair chance of making money in the capital market, then people will not invest in it. The allegation is that it is cornered by a few. Maybe a couple of hundred people, essentially, are the main players in this market,” warned De Silva, regarding the implications of a lack of faith in the market.
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