Fitch assigns Asia Asset Finance’s proposed senior debt ‘A+(EXP) rating

Friday, 3 May 2024 00:00 - - {{hitsCtrl.values.hits}}

Fitch Ratings has assigned Asia Asset Finance PLC’s (A+(lka)/Stable) proposed Sri Lankan rupee-denominated senior unsecured debentures of up to Rs. 2 billion an expected National Long-Term Rating of ‘A+(EXP)(lka)’.

The proposed debentures are likely to have maturities of three and five years and to be listed on the Colombo Stock Exchange. The company plans to use the proceeds to expand its loan book. The final rating is subject to the receipt of final documentation conforming to information already received.

The proposed senior unsecured debentures are rated at the same level as Asia Asset Finance’s National Long-Term Rating in accordance with Fitch’s criteria. This is because the proposed debentures will rank pari passu with the company’s other senior unsecured debt. Fitch assigned Asia Asset Finance a first-time National Long-Term Rating of ‘A+(lka)’ with a Stable Outlook on 7 February 2024.

Asia Asset Finance’s rating reflects the expectation that India-based Muthoot Finance Ltd. (MFL, BB/Stable) will provide extraordinary support to its 72.9%-owned subsidiary, if required. This takes into account Asia Asset Finance’s small size, modest role and contribution, limited brand sharing and different operating jurisdiction relative to MFL, which we believe limits Asia Asset Finance’s strategic importance to MFL.

Asia Asset Finance’s standalone credit profile does not drive the rating, but is assessed to be materially weaker than its support-driven rating.