August 30, 2006 (LBO) – Commercial Leasing Company Ltd’s senior debt has been rated A-(lka) by Fitch Ratings Lanka Ltd, the agency said Wednesday. The rating outlook is ‘stable’, the agency said adding that it also rides on the strength of company’s key shareholders:
â€¢ Commercial Bank – rated AA+(lka)
â€¢ Chemanex Ltd
â€¢ Singer (Sri Lanka) Ltd, who collectively control 97 percent of the Commercial Leasing (CLC).
CLCs core business lies in selling vehicle leases to the small and midsized companies, of which nearly 75 percent are based outside Colombo.
Portfolio growth has been high between FYE03 and FYE05, with an average year-on-year increase of 53 percent or 3 billion rupees.
Similar to other specialized leasing companies, CLCs funding is predominantly from borrowings (79 percent as at FYE05).
Commercial Bank, a key promoter, was the single largest lender to CLC accounting for around 28 percent of total borrowings as at FYE05, providing a stable source of funding.
Around 63 percent of CLCs loan book (inclusive of cash cover) has been pledged in favour of long-term borrowings as at July 2006.
Fitch notes that a continued increase in the share of asset-backed loans, particularly where asset replacement is permitted, may increase the risk to CLCs senior creditors.