Fitch clarifies Daily FT report ‘Fitch to be fixed?’

Fitch Ratings Lanka Ltd. Country Head Maninda Wickramasinghe has sent the following clarification on what it believes as claims and factual inaccuracies in the 30 December Daily FT article titled ‘Fitch to be fixed?’:

Fitch has made every effort to be transparent and consistent in its rating actions on Hayleys Plc and all other issuers.

Contrary to the article’s claims regarding the agency’s ‘alleged failure to reveal a manual with which it bases the evaluation,’ Fitch would like to reiterate that it has and will continue to provide issuers and market participants with the relevant and specific criteria governing its rating policies and procedures at the end of each rating action and commentary that the agency publishes pursuant to its rating actions.

These criteria and methodologies have been, and will continue to be publicly available on its websites www.fitchratings.com and www.fitchratings.lk on a free-of-charge basis.

In addition Fitch would like to correct the article’s inaccurate statement on the agency’s rating actions on John Keells Holdings Plc (JKH) in December 2002.

Fitch did not remove JKH from rating watch and reaffirm its AAA(lka) rating in December 2002 ‘three months’ after JKH’s downgrade as stated by the Daily FT’s story.

Fitch in fact affirmed JKH at AA+(lka) with a Stable Outlook on 6 December 2002.

The agency on upgraded the National Long-Term rating of JKH to AAA(lka) with a stable outlook on 2 September 2004, almost two years after the downgrade on 6 September 2002 – not three months as indicated in the Daily FT article.

As stated in our media release on 2 September 2004: “The upgrade reflected JKH’s improved credit profile, primarily driven by a substantial increase in equity by way of a share issue in 2003, combined with enhanced earnings partially due to acquisitions made during the recent past. As a result, total debt/EBITDA reduced to 0.9x at end March 2004 versus 1.4x at end-March 2003.”