Singer (Sri Lanka) Ltd secured a SL A credit rating from Fitch Ratings Lanka for its upcoming four-year Rs. 400 mn unsecured redeemable debenture issue.
The firm secured a similar rating for its previous debenture issues.rn
rnSL 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, Fitch said on Thursday.rn
rnThe rating is based on Singers long history of profitable performance, strong franchise and leading market position in key product lines, and its extensive distribution network. rn
rnFurther the rating takes into account Singers well-managed and profitable hire purchase operations, which has played a key role in supporting sales growth.rn
rnBut Singer is not out of the woods yet. Fitch says the Group is vulnerable to changes in the economic cycles and its impact on consumer spending.rn
rnInterest rates, which appear likely to rise over the short to medium-term, are also likely to somewhat impact Singers interest cover.rn
rnldblquote Our concerns regarding the financial position of parent Singer NV, and its impact on SSL have reduced. Subsequent to a restructuring carried out in July 2003, all Asian retailing operations have been placed under a new entity lquote Singer Asia, and the cashflow from these operations will generally be available for the Asian retailing operations only, dblquote said Fitch. rn
rnStrong operating performance and improved operating environment during the past year have strengthened creditor protection ratios of Singer. rn
rnInterest coverage as measured by EBITDA/Interest was 2.6x as against 2.0x in the previous year, due to both low interest rates and high growth in EBITDA. rn
rnTotal debt to EBITDA reduced to 3.2x from 3.7x. Arrearage of the hire purchase (HP) portfolio (Arrears/Total HP Receivables) remained creditably low at approximately 2 percent. rn
rnConsequently, Singers underlying credit quality has improved, and its credit metrics are now at the top end of its present rating category.rn
rnSinger Sri Lanka is a well established consumer durables retailer with a 127 year history of operations in Sri Lanka, and its ultimate parent company is Singer N.V. Netherlands.
It retails a host of brands in addition to the lquote Singer brand, in product categories of White Goods, Consumer Electronics, Furniture and many more appliances. 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. rn
rnFitch Ratings, USA is one of the three global full service credit rating agencies and rates over 85 sovereign nations, 7,600 structured finance ratings, 2,900 international banks and financial institutions. rn
rnFitch Ratings Inc. 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
rn
Clickrnhere for full rating report
rn-LBO Newsdesk: LBOEmail@vanguardlanka.comrnrn
rnrn