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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
