Sri Lanka’s People’s Leasing senior debt gets “AA-(lka)” rating: Fitch

Oct 07, 2015 (LBO) – Sri Lanka’s People’s Leasing and Finance Company has been assigned a B+/AA-(lka) rating for it’s proposed senior unsecured debentures of up to 6 billion rupees with a stable out look, Fitch Ratings said in a statement.

The final National Long-Term Rating is ‘AA-(lka)’, the statement said.

The full rating report follows: 

Fitch Rates People’s Leasing’s Senior Debt Final ‘AA-(lka)’

Fitch Ratings has today assigned People’s Leasing & Finance PLC’s (PLC, B+/AA-(lka)/Stable) proposed senior unsecured debentures of up to LKR6bn a final National Long-Term Rating of ‘AA-(lka)’.

The assignment of the final rating follows the receipt of documents conforming to information already received, and the final rating is the same as the expected rating assigned on 15 July 2015.

The issue will have tenors of four and five years with fixed-rate coupon payments. PLC plans to use the proceeds for working capital purposes, to diversify its funding mix, and to reduce maturity mismatches.

KEY RATING DRIVERS

The proposed debenture is rated in line with PLC’s National Long-Term Rating of ‘AA-(lka)’, given that the issue is expected to rank equally with the claims of company’s other senior unsecured creditors.

PLC’s Issuer Default Ratings (IDRs) and National Long-Term Rating reflect Fitch’s view that PLC’s parent, the state-owned and systemically important People’s Bank (AA+(lka)/Stable), has a high propensity but limited ability to provide extraordinary support to PLC if required. This is because PLC is strategically important to People’s Bank; People’s Bank owns 75% of PLC and has board representation; the two entities share a common brand; and PLC is associated with People’s Bank’s franchise.

RATING SENSITIVITIES

The rating on the debentures will move in tandem with PLC’s National Long-Term Ratings.

PLC’s ratings may be downgraded if People’s Bank is no longer a majority shareholder in PLC, or if People’s Bank’s ability to provide support weakens, or if PLC’s strategic importance to its parent diminishes over time.

Fitch does not expect PLC’s ratings to be upgraded, unless People’s Bank’s ratings are upgraded.

A full list of PLC’s ratings follows:

Long-Term Foreign-Currency IDR: ‘B+’; Outlook Stable

Long-Term Local-Currency IDR: ‘B+’; Outlook Stable

National Long-Term Rating: ‘AA-(lka)’; Outlook Stable

Sri Lanka rupee-denominated senior unsecured debentures: ‘AA-(lka)’

Proposed Sri Lanka rupee-denominated senior unsecured debentures: ‘AA-(lka)’