RAM to buy out partner in Lanka rating firm

Rating Agency Malaysia Bhd (RAM) is believed to be buying out its partner in Lanka Ratings Agency (LRA) of the Ceylinco Consolidated Group of Sri Lanka. RAM and Ceylinco are ironing out the deal and the necessary approvals may come in weeks, a source told Business Times.

RAM officials confirmed that the deal is being finalised, but declined to comment further.

RAM already owns 49 per cent of LRA, while Key Research and Information Ltd, a member of the Ceylinco group, owns the other 51 per cent. The joint venture is worth about 35 million rupees (100 rupees = RM8.92).

The source said Ceylinco's stake divestment in LRA comes as Sri Lanka's second rating agency tries to improve the market's perception towards its impartiality in the domestic debt market.

Operating for over a year, LRA has not had a smooth ride as market players perceive it to be an extension of the Ceylinco group. The uneasy feeling comes despite the Sri Lankan securities watchdog asking all credit rating agencies to refrain from rating any company which it has an interest in, financial or otherwise, the source said.

LRA was established in 2003, while RAM and Ceylinco executed a joint-venture agreement in Colombo on August 29 that year. The rating agency operates in Colombo as a domestic rating agency, similar to RAM's role in Malaysia.

RAM was incorporated in November 1990, with a paid-up capital of RM10 million. Its first international venture had been in Bangladesh in 2002, as one of the larger shareholders of Credit Rating Information Services Ltd (CRISL). RAM is currently assisting CRISL to develop into a credit rating agency with high- quality expertise and credibility.

Business Times