Fitch rates Senkadagala Finance’s proposed debt ‘BBB+(lka)’

Fitch Ratings Lanka has assigned Senkadagala Finance PLC’s (SFC) proposed senior unsecured redeemable debentures of up to Rs. 300 m a ‘BBB+(lka)’ rating. Simultaneously, the agency has affirmed and withdrawn the ‘BBB+(lka)’ rating on SFC’s proposed listed debenture issuance of Rs. 1 b (scheduled to take place in March 2011) due to its non-issuance.

The proposed debt is rated at the same level as SFC’s National Long-Term Rating of ‘BBB+(lka)’/Stable. It has a three-year tenure, and is expected to be raised at a fixed coupon rate, enabling SFC to minimise interest rate risk on its loan book. The debenture will be utilised to finance SFC’s lending operations.

SFC’s ratings reflect its long operating history, sustained healthy capital structure, and its well-managed credit control systems and processes relative to the sector. The ratings are however constrained by SFC’s evolving economies of scale and market share in core operations in relation to some of its larger peers’.

At end-December 2010, SFC accounted for a share of 3% of the local registered finance companies sector assets and operated through a network of over 30 outlets, employing over 200 staff.