According to Fitch, the proposed notes will have a tenor of up to one year, and will be used to finance the company’s working capital requirements.
The agency says, the ratings reflect potential extraordinary support from the government through PLC’s state-owned parent, People’s Bank, in times of distress.
People’s Bank owns 75% of PLC.
“This is based on the strong linkages between PLC and PB, the subsidiary’s strategic importance to PB, as well as the consequent reputation risk to the government if PLC were to default on its financial obligations” added the rating rating release.
Fitch says, People’s Bank’s capacity to support PLC is derived from the financial capacity and propensity of the government of Sri Lanka, given the bank’s increasing role in Sri Lanka’s post-war economic development and its high systemic importance.
Peoples Leasing is the largest non-bank financial institution in Sri Lanka by advances, with a 21% share of the market at end-2011.
According to Fitch, at end-June 2012, its total assets and post-tax profits stood at Rs. 96 billion and Rs. 720 million respectively.