Subscribe

Fitch upgrades AMCL to ‘BBB+(lka)’

2015-03-30 02:57:29
0
1203

Fitch Ratings Lanka has upgraded Sri Lanka-based AMW Capital Leasing and Finance PLC’s (AMCL) National Long-Term Rating to ‘BBB+(lka)’ from ‘BB-(lka)’. 
The Outlook is Stable. The multiple-notch upgrade follows Fitch’s assessment of support from its 90 percent-parent, Associated Motorways Limited (AMW).
AMCL’s rating reflects Fitch’s view that support would be forthcoming from AMW, given the finance company’s strategic importance to the latter. 
This assessment is based on AMCL’s role in group, given strong synergies and operational integration. While its share of financing of AMW’s vehicle sales has remained moderate, AMCL accounted for a substantial share of group profit and assets at end-2014. About 46 percent of its advances comprised vehicle finance facilities provided to its parents’ clients (2013: 49 percent).
AMW is involved in the strategic direction of AMCL, having three out of nine seats on AMCL’s board and through the involvement of current senior managers, including the Managing Director of AMW.
Fitch believes that additional incentives for AMW to provide support to AMCL stem from the common AMW brand, which could have high reputational impact on AMW should AMCL default. Of AMCL’s 17 branches, 10 are based within AMW branches. In addition AMCL’s funding relies on the parent, which provided 67 percent of AMCL’s borrowings at end-2014.
AMW’s rating factors in its modest credit profile, and its stable and strong market share in the import and distribution of new vehicles in Sri Lanka, particularly through products from the Maruti Suzuki brands that are aimed at price-conscious consumers. These vehicles are more likely to be sold in greater volumes through macroeconomic cycles compared with high-end products where import duties and indirect taxes are higher.
AMCL’s rating is sensitive to changes in its parent’s ability and propensity to provide support.
AMCL’s rating may be downgraded if AMCL’s size relative to AMW increases and if its operations become more independent of that of its parent.
AMW’s rating could be downgraded if there is a weakening of its financial profile, including its leverage as measured by adjusted net debt/ EBITDAR, a sustained reduction in the market share of vehicle brands such as Maruti Suzuki, or a material dilution in the relationship between AMW and its automotive end-brands, particularly Maruti Suzuki. AMW’s rating may be upgraded if there is a sustained increase in its market share in brand new vehicle sales in Sri Lanka.


  Comments - 0

Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.
Name is required

Email is required
Comment cannot be empty

Chithral Somapala introduces a brand new inspirational music video

Friday, 18 January 2019 11:52
0
281

A brand new music video by , Chithral Somapala was launched on the 16th of January at the Colom


Mobitel 4G nation winners enjoy thrilling Helicopter tour in Matale

Friday, 18 January 2019 11:08
0
165

Mobitel once again hosted a thrilling helicopter ride for its loyal customers to create awarene


EDEX Expo 2019 – Celebrating 16 years of Excellence in Education and Career Guidance

Friday, 18 January 2019 10:52
0
268

Sri Lanka’s Premier and Largest Education Exhibition and Job Fair, will once again take center


More News