"Fitch derives considerable comfort from the strength of its ultimate parent BOC, which effectively owns 88 percent of MCSL's equity and wields considerable influence at its Board level by way of common directors," Fitch said.
"However, MCSL's rating is constrained by its weak asset quality, low capitalisation, and resulting weak solvency."
MCSL's asset quality at the three-month level (as looked at by Fitch vis-a-vis the six month level by Central Bank of Sri Lanka's regulations for registered finance companies) remained weak with non-performing loans (NPL)/Gross Loans at 20 percent at the end of the 2006 financial year (19 percent in 2005).
Provision coverage for all NPLs in arrears over 6 months improved to 54 percent in 2006 from 32 percent in 2005.
The agency said that NPLs at the three-month level and resu