Nov 14, 2008 (LBO) – Fitch Ratings Sri Lanka has confirmed Seylan Merchant Leasing PLC’s (SML) ‘BB+ (lka)’ long term rating with a ‘stable’ outlook. “SML’s rating reflects its modest financial profile, short operating history and small asset base,” Fitch said.
“The rating also factors in the implied support assumed to be available from its ultimate parent, Seylan Bank. Seylan Bank is rated ‘BBB+(lka)’ with a ‘stable’ outlook.
In February 2007, SML had obtained a license to operate as a registered finance company, allowing it to raise fixed and savings deposits from the public.
Deposits had increased to 57 percent of the funding base at the end of the 2007 financial year.
Funding from borrowings had fallen to 19 percent at the end of the 2007 financial year from 75 percent at end of the 2006 financial year, mainly through the conversion of a majority of promissory notes – which was earlier the main source of funding – to deposits.
The company has satisfied the statutory liquid assets requirement on deposits since May 2007.
SML’s portfolio contracted by 2.6 percent in the financial year 2007 as challenging economic co