Fitch affirms and withdraws ratings of LOLC Group

Fitch Ratings Lanka has affirmed the following ratings of the Lanka ORIX Leasing Company PLC (LOLC) group of companies and simultaneously withdrawn the ratings.

• Lanka ORIX Finance PLC (LOFIN): National Long-Term Rating: Affirmed at ‘A-(lka)’/Negative Outlook and withdrawn
• LOLC: National Long-Term Rating: Affirmed at ‘BBB+(lka)’/Negative Outlook and withdrawn; Rs. 1.25 b senior unsecured redeemable debentures: Affirmed at ‘BBB+(lka)’ and withdrawn
• Commercial Leasing & Finance PLC (CLC):-National Long-Term Rating: Affirmed at ‘A-(lka)’/Negative Outlook and withdrawn

The affirmation of LOLC’s ratings reflect improvements to its credit profile in the six months to 30 June 2012, compared with 31 December 2011, stemming from reported lower leverage and the lengthening of its debt maturities through the issuance of long-term debentures. The Negative Outlook continues to reflect the uncertainty surrounding LOLC’s funding strategy for its future investment activities and associated financial risks.The affirmation of LOFIN’s rating reflects its strong franchise among Sri Lanka’s finance companies and sustained satisfactory financial profile. The Negative Outlook reflects the risk profile of LOFIN’s parent LOLC and the potential for it to hurt its subsidiary’s financial profile. LOFIN’s franchise remains linked to that of LOLC, and as a subsidiary of the group, its ties with LOLC remain intact.

The affirmation of CLC’s rating reflects its strong franchise among Sri Lanka’s non-bank financial institutions and sustained healthy credit profile. The Negative Outlook reflects the risk profile of CLC’s parent LOLC and the potential for it to hurt its subsidiary’s financial profile. CLC’s franchise remains linked to that of LOLC, and as a subsidiary of the group, its ties with LOLC remain intact. Fitch has withdrawn the ratings as the LOLC Group of Companies has chosen to stop participating in the rating process. Therefore, Fitch will no longer have sufficient information to maintain these ratings. Accordingly, Fitch will no longer provide ratings or analytical coverage for the companies.