Fitch rates Sampath Leasing’s proposed senior debt at ‘A’

Fitch Ratings Lanka has assigned Sampath Leasing and Factoring Ltd’s (SLFL) proposed senior unsecured redeemable debentures of up to LKR500m a ‘A(lka)’ National Long-Term rating.

The issue has been rated at the same level as SLFL’s National Long-Term rating of ‘A(lka)’ - which has a Positive Outlook, in line with Fitch’s criteria for rating senior unsecured debt of financial institutions.

The rating reflects the implied support assumed from SLFL’s main shareholder - Sampath Bank PLC (SB, ‘AA-(lka)’/Positive, 100% ownership), given the strong strategic and operational linkages between the two entities.

The issue offers semi-annual, fixed-rate interest payments, which help SLFL mitigate its interest rate risk and equal bullet principal repayments in the third and fourth year. The issue proceeds will be utilised to fund SLFL’s lease and hire purchase portfolio.

At 31 December 2011, SLFL’s asset base stood at LKR4.1bn, which amounted to a 2% share of SB’s group assets, while SLFL’s share of SB’s group post-tax profits amounted to 5%.