Fitch rates People’s Leasing’s senior debt. final ‘AA-’

Thursday, 5 April 2018 00:00 - - {{hitsCtrl.values.hits}}

Fitch Ratings Lanka has assigned People’s Leasing & Finance PLC’s (PLC, B/AA-(lka)/Stable) proposed senior debenture issue of up to LKR6 billion a final National Long-Term Rating of ‘AA-(lka)’.

The final rating is the same as the expected rating assigned on 6 March, and follows the receipt of documents conforming to information already received.

The debentures, which will have tenors of four and five years and carry fixed coupons, will be listed on the Colombo Stock Exchange. PLC expects to use the proceeds for working capital purposes and to retire some existing debentures.

The final rating is subject to the receipt of final documentation conforming to information already received.

Key rating drivers

The proposed debentures are rated in line with PLC’s National Long-Term Rating as the issue ranks equally with claims from the company’s other senior unsecured creditors.

PLC’s Issuer Default Rating and National Long-Term Rating reflect Fitch’s view that PLC’s parent, the state-owned and systemically important People’s Bank (Sri Lanka) (AA+(lka)/Stable) would provide PLC with extraordinary support, if required. People’s Bank’s propensity to support PLC stems from its group role as a strategically important subsidiary and the high reputational risk to People’s Bank should PLC default, as the bank owns 75% of PLC and shares a common brand. People’s Bank’s ability to provide support to PLC is limited, and stems from Sri Lanka’s rating of ‘B+’ with Stable Outlook.

Rating sensitivities

The ratings on the proposed debentures will move in tandem with PLC’s National Long-Term Rating.