Fitch rates Senkadagala Finance's proposed debt 'BBB+

Fitch Ratings Lanka has assigned Senkadagala Finance Company Ltd's (SFC) proposed senior unsecured redeemable listed debentures of up to Rs. 1b a 'BBB+(lka)' rating.

The agency has simultaneously affirmed SFC's National Long-Term rating at 'BBB+(lka)'. The outlook is stable.

SFC's ratings reflect its long operating history and sustained strong capital structure, as well as its relatively sound credit control systems and processes. The ratings are however constrained by SFC's evolving economies of scale and relatively low market share in core operations in relation to some of its larger peers.

The proposed debt issue has a five-year tenure, and Fitch expects it 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 lending operations as well as to settle existing debt, and is expected to be listed on the Colombo Stock Exchange.

SFC is a mid-sized registered finance company (RFC) with an asset base of LKR6.2bn at 31 December 2010. It operates through a network of over 30 outlets, employing over 200 staff. At end-March 2010, SFC accounted for a share of 3% of local RFC sector assets. The company was established in 1968 by the Balasuriya family, who owns 90% of SFC's equity.