Leasing Rating

Mar 01, 2011 (LBO) – Fitch Ratings has confirmed Sri Lanka’s Commercial Leasing Company’s ‘A-(lka)’ rating with a ‘stable’ outlook and also confirmed its unsecured debentures at ‘A-(lka)’. Fitch said CLC’s ratings are driven by its standalone financial strength rather than support from its parent, Lanka Orix Leasing Company (LOLC), rated at A-(lka)/Negative).

“They reflect the company’s sound asset quality and profitability and robust capitalization,” Fitch said.

“The Stable Outlook reflects the agency’s view that CLC is likely to maintain credit metrics that are consistent with the current ratings.”

Fitch said sustained improvements in CLC’s credit profile could improve the rating, but bad loans, a weakening in capital due to aggressive asset growth without enough profits or large equity investments that can reduce profits, could hurt ratings.

CLC is fully owned by LOLC, and while there is some integration of core operations such as treasury and certain back-office functions, the two companies operate as separate entities, benefiting from strong brand franchises in their respective customer segments.

CLC is an important contributor to LOLC’s profits (In 2010 it