Oct 11, 2020 (LBO) – Fitch Ratings has published Sri Lanka-based power producer Lakdhanavi Limited’s first-time National Long-Term Rating of ‘AA+(lka)’. The Outlook is Stable.
Fitch rates Lakdhanavi based on the consolidated profile of the parent, LTL Holdings (Private) Limited (LTLH), due to the strong legal and operational linkages between the two entities, as defined in our Parent and Subsidiary Rating Linkage Criteria.
The rating reflects LTLH’s leading market position in the country’s power sector, stable cash flow generation stemming from fixed long-term operation and maintenance (O&M) contracts and power purchase agreements (PPAs), strong EBITDA margins offset by the small operating scale of its business segments other than O&M and power generation, which are inherently more volatile.
The rating also reflects Fitch’s assessment that the group will maintain an adequate financial profile with EBITDA/interest coverage (including proportionate consolidation of subsidiaries Lakdhanavi Bangla Power Limited (LBPL: 51%) and Feni Lanka Limited (Feni: 56%) above 2.5x over the rating horizon.