Fitch rates LB Finance’s outstanding debentures ‘BBB+’

Fitch Ratings has assigned LB Finance PLC’s (LB, A­ (lka)/Stable) outstanding to Sri Lanka rupee denominated subordinated debentures a National Long-term Rating at ‘BBB+(lka)’.  The debentures mature in 2016, 2017 and 2018 and have total value of Rs.2.545 billion.

Key rating drivers

The outstanding subordinated debentures are rated one notch below LB’s National Long-term Rating to reflect their subordination to senior unsecured creditors.

LB’s National Long-term Rating reflects its established franchise among licensed finance companies, whose higher yielding exposures have supported sound profitability. The rating also captures its relatively higher risk appetite compared to peers as indicated by its exposure to gold backed loans. Fitch views LB’s capital as satisfactory while its revenue generation is sound.

Rating sensitivities 

The rating on the outstanding debentures will move in tandem with LB’s National Long­Term Ratings.

These ratings are primarily sensitive to changes in LB’s capitalisation, risk appetite and liquidity position.

A full list of LB’s ratings follows:

National Long­Term Rating: ‘A­(lka)’; Outlook Stable

The following outstanding Basel II­compliant subordinated debentures are rated ‘BBB+(lka)’:

­ LKR215.0m 12.68% unlisted subordinated debentures due 2016

­ LKR100.0m 12.30% unlisted subordinated debentures due 2016

­ LKR230.0m 12.30% unlisted subordinated debentures due 2017

­ LKR640.1m 14.00% listed subordinated debentures due 2018

­ LKR757.0m 14.50% listed subordinated debentures due 2018

­ LKR602.9m 15.00% listed subordinated debentures due 2018