Dec 24, 2013 (LBO) – Fitch Ratings has downgraded Sri Lanka’s Multi Finance Plc, a registered finance company by two levels to ‘B-(lka)’ on rising non performing loans. The firm was also place on negative watch at the new rating level.
Fitch said the firm’s unprovided loan losses exceeded equity.
Sri Lanka’s economy has been slowing following the bursting of a credit bubble, which was effectively accommodated by central bank credit through sterilized forex sales.
The full statement is reproduced below:-
Fitch Downgrades Multi Finance to ‘B-(lka)’, Places on Negative Watch
23 Dec 2013 11:41 AM (EST)Fitch Ratings-Colombo/Hong Kong-23 December 2013: Fitch Ratings Lanka has downgraded Sri Lanka-based Multi Finance PLC’s (MFP) National Long-Term Rating to ‘B-(lka)’ from ‘B+(lka)’, and placed it on Rating Watch Negative (RWN).
KEY RATING DRIVERS
The two-notch downgrade reflects a sharp deterioration in MFP’s solvency with unprovided NPLs (defined as more than three months past due) significantly exceeding equity. Fitch expects MFP’s liquidity to remain under pressure as its concentrated deposit base continues to contract. Fitc