Fitch rates People’s Leasing’s Rs. 1 b commercial paper at ‘F1’

Fitch Ratings Lanka has assigned People’s Leasing Company Plc’s (PLC, ‘A+(lka)’/Stable) proposed commercial paper issue of up to LKR1bn an ‘F1(lka)’ National Short-term rating.

The proposed issuance will be utilised to finance PLC’s working capital / lending.

Of the proposed Rs. 1 billion, Rs. 750 million is expected to have tenure of one year, while a further Rs. 100 million and Rs. 150 million will have tenures of three and six months respectively.

PLC’s ratings reflect Fitch’s view that its parent, People’s Bank (PB, ‘AA (lka)’/Stable) is likely to extend support in a stressed scenario, if required. This view is underpinned by PB’s majority ownership of PLC (31 December 2011: 71.5%), common board representation, PLC group’s significant profit contribution to PB’s consolidated profile (end-September 2011: 36% of PB group profits), and the strong strategic and operational linkages between the companies.

An ‘F1 (lka)’ category short-term rating indicates the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under the agency’s National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country. Where the liquidity profile is particularly strong, a “+” is added to the assigned rating.