ICRA to offer rating services in Sri Lanka
India's rating major ICRA Limited (ICRA) is poised to offer credit
rating services in Sri Lanka following the grant of rating licence to
ICRA Lanka Limited (ICRA Lanka), a wholly-owned subsidiary of ICRA, by
the Securities and Exchange Commission of Sri Lanka.
The Lankan venture was incorporated early this year and will be
offering its services in the local market, putting into use parent
ICRA's accumulated experience in the areas of credit rating, grading and
investment information.
Speaking on the occasion, ICRA Vice-Chairman and Group CEO P.K.
Choudhury said, "Sri Lanka, for us, holds a lot of promise at this
juncture. With the decades-long war now over, the country appears poised
to move up on a higher growth trajectory. From our perspective, the time
is just right for ICRA to enter the country and contribute towards the
development of the nation's capital markets and also participate in that
growth."
Elaborating on the subject, ICRA Managing Director and CEO Naresh
Takkar, said the macro environment in Sri Lanka has improved
considerably during the last two years and he was optimistic that growth
rates would move up significantly now.
He underscored the fact that the Lankan economy had reported growth
rates of around 6 percent even during difficult periods, and pointed to
last year's 8 percent to justify his optimism. Mr. Takkar added that
given the need, potential and willingness to develop Sri Lanka's capital
markets for faster growth, the prospects for the ratings business there
are bright.
According to the Colombo-based ICRA Lanka Director W Don Barnabas,
optimism abounds in Sri Lanka on the country being able to achieve steep
growth rates in the years ahead. He feels this growth will be driven,
inter alia, by the development of the capital markets.
"But," he adds, "although we have a relatively developed, though
small, equity market, the debt market is still in its infancy. There is
great scope to develop this market, and that augurs well for the ratings
business in Sri Lanka."
Commenting on the current status of the ratings business in that
country, Barnabas said there is large scope to add to the width and
depth of the ratings market in Sri Lanka.
In Sri Lanka, while the government debt market made some significant
strides in the recent past, the total size of the government debt and
corporate bond markets remains very small in relation to GDP, as
compared with most other Asian nations.
But it is well recognised and accepted by policymakers in Sri Lanka
that an expanded bond market would improve the efficiency of the
domestic capital market by lowering spreads, extending maturities, and
raising the return on long-term investments.
Further, it would also contribute positively to mobilising long-term
investments, a requirement for high and sustainable economic growth
rates. In this context, it is significant that Sri Lanka is one of the
first countries in the region to have deregulated its markets and built
up infrastructure to facilitate efficiency in the financial markets. |