Corporate bond market needs punch
Lanka Ratings re-branded as RAM Ratings:
Anjana Samarasinghe
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Chief Economist Dr. Yeah Kim Leng
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The Government bond market is active than the corporate bond market
in Sri Lanka and the local corporate bond market needs to develop more.
Executive Director of RAM Holdings Berhad, Suresh Menon said only Rs.
2 billion was raised by corporate bonds as against Rs. 886 billion
government bonds in Sri Lanka. "There is a huge potential for the
corporate bond market to grow. However the local corporate bond market
is undeveloped," Menon said.
He said the Sri Lankan bond market is lacking in liquidity and
awareness among investors on the bond market is at a low level. Most of
the investors are not aware of the benefits of issuing bonds. Processes
for issuance are complex in the local bond market.
"The country cannot depend on the banking system and the bond market
can play a vital role in developing the country's economy," he said.
Menon was speaking at a press conference to announce the re-branding
of Lanka Rating Agency Limited to RAM Ratings (Lanka).
The re-branding follows the reorganisation exercise of its Malaysian
parent company, RAM Holdings Berhad. As part of its restructuring. RAM
Holdings - an affiliate of Standard & Poor's ("S&P").
"When it comes to rating we are completely independent from Standard
and Poor's. We are into domestic rating and RAM Sri Lanka will focus on
Sri Lanka," he said.
RAM Lanka will assist in developing the Sri Lankan bond market
through educating investors and creating investor confidence through
accurate rating.
Talking about the Malaysian bond market he said that there are lots
of financial incentives thrown by the regulator for the development of
the bond market.
We have conferences, workshops, road shows, meetings and dialogue
with industrial players to educate the investors in Malaysia. RAM also
consults regulators in Malaysia, he said.
Chief Economist of RAM Holdings Berhad, Dr. Yeah Kim Leng said the
Sri Lankan economy and the Malaysian economy have similarities.
However the per capita income of Malaysia is higher than Sri Lanka.
Private sector investments are important for economic growth.
"Private sector investments sustain highly in Sri Lanka. Last couple
of decades national savings too has increased. Sri Lanka has potential
to grow and the country could grow more than it has targeted," he said.
Meanwhile, this re-branding also coincides with the recognition of
RAM Ratings [J1] as an External Credit Assessment Institution ("ECAI")
by the Central Bank of Sri Lanka under the Basel II framework. Through
this framework, a corporate can gain a distinct advantage with a high
investment-grade rating (A- and above).
RAM Ratings anticipates these regulatory changes to not only
popularise credit ratings, but also to reduce the cost of corporate
borrowing.
In line with its international standards and methodologies, RAM
Ratings has changed its rating notches to be in line with those of S&P.
Effective January 14, 2008, RAM Ratings will use "+" (plus) to
indicate the higher end of the generic rating scale or grade while "-"
(minus) will indicate the lower end. There will be no numerical symbol
to indicate the middle of the generic rating scale. |
