Fitch Ratings has placed the National Fund Credit Quality Rating assigned to the Ceylon Income Fund of 'A(lka)' on Rating Watch Negative as there is uncertainty regarding the credit quality of a significant portion of the funds' underlying assets.

KEY RATING DRIVERS

This action comes after the Securities and Exchange Commission of Sri Lanka (SEC) did not
renew the licence of Lanka Rating Agency (LRA), which rated 32% of Ceylon Income Fund's
assets as at end-May 2015.

The SEC on 1 July 2015 issued a statement saying that LRA is not entitled to assess, evaluate or
review the creditworthiness of listed securities or securities to be listed.

The fund's Weighted Average Rating Factor was previously consistent with a National Fund
Credit Quality Rating in the 'A(lka)' category. The fund primarily invests in corporate debt
instruments and is managed by Ceylon Asset Management. The National Fund Volatility Rating is 'V-NR'.

RATING SENSITIVITIES:

The Rating Watch Negative will be resolved if the assets that were previously rated by LRA
reduce materially or if these assets are rated by another rating agency. Fitch will review the
Rating Watch in one month's time.