ICRA Lanka revises outlook to Negative for Commercial Credit and Finance

ICRA Lanka Ltd., subsidiary of ICRA Ltd., a group company of Moody’s Investors Service, has reaffirmed the issuer rating of Commercial Credit and Finance PLC (CCFL) at [SL]BBB while revising the outlook to Negative from Stable. 

ICRA Lanka has withdrawn the issue rating of [SL]BBB- (pronounced SL triple B minus) for the Rs. 500 m listed unsecured subordinated redeemable debentures program, at the request of the company, as the same has been fully redeemed.

ICRA Lanka has reaffirmed the issue rating of [SL]AA-(SO)1 (pronounced SL Double A Minus Structured Obligation) with stable outlook for the Rs. 1,000 million guaranteed subordinated redeemable debenture program of the company, which is currently listed on the Colombo Stock Exchange. 

This rating is based on the strength of the unconditional and irrevocable guarantee from Hatton National Bank PLC (HNB) for the principal amount of Rs. 1,000 m and the two quarterly interest installments of Rs. 52.5 m maintained as a security deposit with the Trustee. The guarantor undertakes the obligation to pay, on demand from the Trustee, Rs. 1,000 m, the principal amount of the subordinated redeemable debentures. 

ICRA Lanka also factors in the undertaking from the Trustee to utilise the security deposit to pay the interest amount due to the investors and declare the entire guaranteed amount as payable, in the event the issuer does not meet the scheduled interest payment on any due date or in the event the issuer does not redeem the debenture in full on any redemption date and redeem the instrument in full. 

The rating also assumes that the guarantee will be duly invoked by the Trustee, as per the terms of the underlying Trust deed, Trustee’s undertaking and guarantee agreements, in case there is a default in payment by CCFL.

ICRA Lanka has also reaffirmed the issue rating of [SL]A+(SO)1 (pronounced SL A plus Structured Obligation) rating with Stable outlook for the Rs. 2,000 m guaranteed subordinated redeemable debentures program, which is currently listed on the Colombo Stock Exchange. This rating is based on the strength of the unconditional and irrevocable guarantees from Sampath Bank PLC (Sampath) and HNB covering the principal and two interest installments (semi-annual) of the proposed issue. 

Each guarantor undertakes the obligation to pay, on demand from the Trustee, Rs. 1,000 m, being 50% of the total principal sum of Rs. 2,000 m and, one half-yearly interest installment of the Subordinated Redeemable Debentures. The rating also assume that the guarantees will be duly invoked by the Trustee, as per the terms of the underlying Trust deed and guarantee agreements, in case there is a default in payment by CCFL.