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L. Joseph
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COLOMBO, SRI LANKA, October 4, 1999 — The International Finance Corporation will make a 20 percent equity investment of up to US$100,000 in Duff & Phelps Credit Rating Lanka Ltd. (DCR Lanka), an investment designed to spur private sector investment with reliable credit ratings.
DCR Lanka, the pioneer rating agency in the country, will use internationally accepted standards to provide credit rating services for the Sri Lankan market. Its technical partner will be Chicago-based Duff & Phelps Credit Rating Co., which has offices in 26 countries around the world. Fifteen local financial institutions will also invest in DCR Lanka.
Mr. Rashad Kaldany, IFC director for south and southeast Asia, said that improving credit rating services in Sri Lanka would provide investors with an objective risk evaluation of debt securities and lead to greater transparency and investor protection. Credit worthy borrowers will have access to relatively lower rates, and the investment will help create an environment for a healthy corporate debt market, he said. He added that clients would be more willing to invest in corporate debt instruments because of the comfort afforded by the credit rating agency.
IFC's investment is part of a concerted effort to develop the local debt securities market.Complementary initiatives have included IFC guarantees to bring high quality debt security issues to the market and the establishment of strong market intermediaries for debt securities. In this context, a regional symposium is scheduled to be held in Sri Lanka this month to examine and address the main barriers to the development of debt markets in south Asian countries.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.