Fitch Ratings

Asian Alliance

RAM Ratings Lanka has upgraded the Asian Alliance Insurance PLC’s claims paying ability from BB+ to BBB-.

The Rating outlook remains stable.

RAM says the upgrade follows the company’s successful rights issue in November 2010.

It adds that the corporate exercise has strengthened the Insurers capitalization and is expected to enhance its financial performance through greater investment income.

The Asian Alliance Insurance raised Rs. 812.5 million through the rights issue.

Trade Finance and Investment Ltds. Rating

Fitch Ratings Lanka has affirmed the Trade Finance & Investments Ltd’s National Long-term rating at ‘BB+(lka)’ with a stable Outlook.

TFI’s rating factors in its high capitalization in terms of its size of operation and good profitability.

The Fitch says the rating is constrained by TFI’s small asset base, limited product diversity, and narrow funding base.

The Agency adds that the rating could be upgraded if TFI increases market share in its core operations significantly relative to its peers and maintain good asset quality and profitability indicators.

MGT Knitting Mills

Meanwhile Fitch has downgraded the MGT Knitting Mills PLC’s National Long term rating to ‘BBB (lka)’ from ‘BBB+ (lka)’.

The Outlook is negative.

According to the Rating agency the downgrade primarily reflects HMGT’s lower operating margins and its inability to increase sales prices in the face of significantly increased cotton prices.

Fitch also notes that HMGT’s operations management may require strengthening due to lapses in the debtor and inventory management areas as indicated by the company.

Fitch says it is concerned with the Knitting firms ability to improve its margins in the face of high competition and high input costs as well as a possible loss of bargaining power with the local apparel manufacturers following the removal of the GSP plus scheme by the EU.

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