Fitch rates Singer Finance’s senior debt final ‘BBB+’
Thursday, 15 August 2013 00:01
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Fitch Ratings has assigned Sri Lanka-based Singer Finance (Lanka) PLC’s (SFL; BBB+(lka)/Stable) senior unsecured debt a final National Long-Term rating of ‘BBB+(lka)’. The final rating is at the same level as the expected rating assigned on 3 June 2013 (see ‘Fitch Rates Singer Finance’s proposed senior debt ‘BBB+(lka)(EXP)’ on www.fitchratings.com).
On 8 August 2013, the entity signed the trust deed for issuance of up to Rs. 1.25 b senior unsecured bonds in three tranches with maturities of 3, 4 and 5 years and fixed rate coupons of 14%, 14.25% and 14.5%, respectively.
Key rating drivers
The debentures are rated at the same level as SFL’s National Long-Term rating of ‘BBB+(lka)’, as they constitute direct, unconditional, unsecured and unsubordinated obligations of the company. SFL’s rating reflects support from its 80.4% parent, Singer (Sri Lanka) PLC (Singer; A(lka)/Stable). It is two notches lower than that of Singer reflecting Fitch’s classification of SFL as being of strategic importance to Singer. SFL provides financing for the parent’s products. Fitch believes that there are currently no plans to sell SFL and the existence of common creditors contributes to a high reputational risk from a default of SFL.
Rating sensitivities
Any changes to SFL’s National Long-Term rating would impact the issues’ National Long-Term rating. SFL’s rating could change if Singer’s rating were to change or if SFL’s strategic importance to Singer were to change.
Singer raised its stake in SFL to 80.4% from 75% by injecting Rs. 582.2m of equity in 2012. SFL contributed 19% to the total group pre-tax profit as at end December 2012 (average 16% 2009-2012). Further details on Singer Finance are available on www.fitchratings.com and www.fitchratings.lk.
