Good Marks

Fitch Ratings Lanka Ltd (FRL) has assigned SL A national credit rating to the Implied Long-term unsecured Senior Debt of First Capital Treasuries Ltd (FCTL).
SL A rating denotes a low expectation of credit risk.

The capacity for timely payment of financial commitments is considered strong.

This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings, says Fitch Ratings in a statement. rn

rn”The rating reflect the firms position as a prominent primary dealer in Sri Lanka, its operating history of growth and profitability, moderate financial strength and the evolving nature of its risk management systems,” says Fitch.rn

rnFCTL has a record of consistent profitability even under difficult market conditions.

The combination of FCTLs active trading presence and its emphasis on developing its distribution capabilities has helped it weather the impact of rising interest rates in the past.

Reported profitability has improved supported by declining interest rates. rn

rnSystemic and counter-party risks in the Government securities market are high under current market conditions.

However, the scheduled implementation of an electronic trading system, a Real Time Gross Settlement (RTGS) system and the dematerialisation of government securities would each play a pivotal role in reducing such risks and, consequently, extending greater depth and liquidity to the market.rn

rnThe regulatory prohibition on Primary dealers from conducting any business other than dealing in government securities results in inadequate diversification in revenues.

Revenues are, therefore, likely to be volatile in tune with interest rate movements.rn

rnFCTL is the primary dealer subsidiary of the First Capital Limited (FCL). Based in Sri Lanka, FCL has interests in debt trading, fixed income broking, corporate finance and asset management through its various subsidiaries.

FCL is held privately by individuals and publicly listed corporates.

FCTL was one of the first non-bank primary dealers to obtain a licence after the CBSL commenced licensing of primary dealers in Sri Lanka in 2000.rn

rnFitch Ratings Lanka Ltd is a joint venture between Fitch Ratings, USA, International Finance Corporation Washington, Central Bank of Sri Lanka and several other leading local financial institutions.

Fitch Ratings, USA is one of the three global full service credit rating agencies and rates over 2,900 international bank and financial institutions. Fitch Ratings, USA has over 90 years experience in credit analysis and a combined analytical and professional staff of more than 1,400 many of whom possess over 10 years of specialised industry experience.rn

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-LBO Newsdesk: LBOEmail@vanguardlanka.comrn