May 23, 2008 (LBO) – Sri Lanka’s People’s Leasing is getting 10 million US dollars from the Asian Development Bank (ADB) which it can start lending within the next 30 days, a top official said. People’s Leasing inked a deal Friday with the ADB to lend to the small and medium enterprises in the island.
To protect itself from exchange rate risk, People’s Leasing will raise money against the US dollar funds and lend. The leasing company is expecting its borrowings costs to be lower as a result.
“In the current high interest rate environment these loans will be more competitive as our cost of borrowing is lower,” chief executive D P Kumarage said.
The firm is getting 5-year credit from ADB at an attractive premium above the London Interbank Offered Rate, he said. The money is payable in half yearly installments.
In Sri Lanka most leases are for four or five years. But many leasing firms find it difficult to find matching funds.
“This is medium term borrowing and we lend medium term, so there is no asset:liability mis-match,” Kumarage said.
“So it will strengthen the balance sheet.”
Poeple’s Leasing is only the second institution in the island to get a direct cr