Sri Lanka People’s Leasing to sell US$150mn bond

July 18, 2012 (LBO) – People’s Leasing Company Plc, Sri Lanka’s largest lease financier and a unit of state-run People’s Bank said it is planning to raise 150 million US dollars from a Euro dollar bond. Standard & Poor’s rated the company ‘B+’ Wednesday with a ‘stable’ outlook.

“In our view, the People’s Bank group has a strong and long-term commitment to support Plc,” S & P said in a statement.

“The leasing business is an important component of the group and contributed about 13% of the group’s total assets in 2011.

“PLC’s operating performance is better than that of the parent. The company
contributed 26% to the group’s profits in 2011.”

But S & P said the strong credit growth and economic development indicated risks

“The high loan growth, coupled with rising competition and evolving risk management practices, could expose the sector to increased credit risk,” the rating agency said.

“PLC’s dependence on wholesale funding and its concentration in commercial vehicle financing also constrain the rating.

“The company’s strong capital and adequate earnings temper these weaknesses.”

Financial sources said Barclays and HSBC may lead manage the bond.

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