Fitch Ratings has affirmed Ceylon Dollar Bond Fund’s International Fund Credit Quality Rating at ‘B+f’ and Fund Market Risk Sensitivity Rating at ‘S5’. The fund is managed by Ceylon Asset Management (CAM).
The affirmation of the ‘B+f’ International Fund Credit Quality Rating is driven by the weighted-average rating factor (WARF), the fund’s rating distribution and its investment guidelines.
The fund has a limited investment space, as it only invests in US dollar bonds issued by the government of Sri Lanka (B+/Stable), licensed banks in Sri Lanka and Sri Lankan corporates that are rated by an international rating agency.
This restricts potential investments to 15 listed issuances totalling around USD 10 bn as well as Sri Lanka Development Bonds (SLDBs) of around US$ 4 bn. SLDBs are unlisted, unrated US dollar bonds issued by the government domestically.
The affirmation of the Fund Market Risk Sensitivity Rating is driven by the market risk factor as well as Fitch’s consideration of qualitative factors, such as the fund manager’s ability to extend duration above current levels if it sees fit. The rating also reflects Fitch’s conservative assumptions about potential volatility in emerging market debt.
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