Fitch assigns ‘AA-(lka)’ to People’s Leasing’s Rs.8bn debenture

Fitch Ratings yesterday assigned People’s Leasing & Finance PLC’s (PLC, AA-(lka)/Stable) proposed senior debenture issue of up to Rs.8 billion an expected national long-term rating of ‘AA-(lka)(EXP)’.

The debentures, which will have tenures of three, 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 reduce maturity mismatches. Fitch assigns...

The final rating is subject to the receipt of final documentation conforming to information already received. The proposed debenture is rated in line with PLC’s national long-term rating of ‘AA-(lka)’, as the issue is expected to rank equally with claims of 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 extraordinary support to PLC, if required. 

People’s Bank’s propensity to support PLC stems from its 75 percent-shareholding in PLC, common brand and PLC’s position as the bank’s “strategic subsidiary”.
PLC accounted for 29.6 percent of People’s Bank’s consolidated post-tax profits and 9.9 percent of total assets at end-March 2016. 

PLC has 110 window offices within People’s Bank branches in addition to its own branches. 
The parent’s ability to provide support to PLC is, however, limited, as reflected in Sri Lanka’s rating of B+. The national long-term rating of People’s Bank reflects Fitch’s expectation of extraordinary support from the sovereign.