Dec 16, 2009 (LBO) – RAM Ratings Lanka said it has downgraded the long-term rating of Central Investments and Finance Limited (CIFL) from B+ to C-, reflecting its poor financial performance and liquidity pressures. It also reflects the acute deterioration in the company’s asset quality, the rating agency said in a statement.
“The outlook on the long term ratings was revised to negative from stable in March 2009, based on CIFL’s increased exposure to real estate, which had exerted pressure on its liquidity position and capital adequacy.”
“The company’s financial performance had also been deteriorating, depressed by hefty overheads and slumping real estate sales.”
Following a rights issue in the financial year ended March 2009, the company’s liquidity position improved. However, this was affected by the crisis and loss of public confidence that affected all finance companies.
In an effort to ease the liquidity stress, CIFL has negotiated with its depositors to renew their deposits.
Meanwhile, CIFL has continued to increase its investments in real estate, which made up 64.86 percent of its asset base as at end September 2009.
The company’s real estate investments are concentrate