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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » PLC unveils new identity, mulls international bond issue

PLC unveils new identity, mulls international bond issue

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PLC unveils new identity, mulls international bond issue
December 4, 2012, 7:38 pm

The Island
By Mario Andree

Peoples Leasing Company (PLC), a leading leasing provider in the country yesterday unveiled its new corporate identity as People’s Leasing and Finance Company focusing to tap new areas of business, and also enter the international bond market.

After 16 years of operations from 1995, the company now holds group assets of Rs. 100 billion and was recently granted finance company status by the Central Bank.

Facing several challenges both from competitors and policies, the company hopes for a better future in the finance sector.

Peoples Leasing and Finance Company CEO D. P. Kumarage said that the company hopes to issue an international bond capitalizing on the opportunities provided through the 2013 budget.

According to him despite turbulence in the finance sector the company sees a profitable future tapping into its current business operations.

He added that the import duty on vehicles, with the company’s main stream of business being in the leasing sector, would have no major effect on the company’s performance though sector wise a major fall was expected.

Consequent to receiving the finance business licence and the change of name to Peoples Leasing & Finance PLC, the company launched its new logo staying in line with its renewed vision. The new company logo embodies the dynamic new approach the company would adopt.

Having received the finance license, People’s Leasing & Finance PLC is now Sri Lanka’s largest and highest rated finance company that is also the only one in Sri Lanka to have received two international ratings. Recently the company’s national long term rating was upgraded by Fitch Ratings Lanka from an A+ (Ika) to a AA- (Ika). The first of the two international ratings achieved by the company is equal to the sovereign from Standard & Poor’s with a B+/B and the second international rating a notch below the sovereign from Fitch Ratings International is rated a B+.


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Dec 05, 2012 (LBO) - Sri Lanka's People's Leasing and Finance Plc, the country's largest non bank lender is planning a 100 million US dollar syndicated loan to fund future expansion, officials said.

Chief executive D P Kumarage said the lender was in talks with a Middle East based party to syndicate the loan, which could have tenor of up to four years.
People's Leasing and Finance Plc has a 'B+' international rating from Fitch and Standard and Poor's. Fitch has given a it a 'AA-' domestic rating.

Kumarage said the loan was a continuation of the same process.

People's Leasing is also eying a separate 10 million dollar foreign borrowing. In a budget for 2013 Sri Lankan firms were allowed to borrow up to 10 million US dollars abroad with no approval required from exchange control authorities.

Last year the lender was mulling a 150 million US dollar bond issue, but did not go through with it. Domestic loan growth also slowed after interest rates rose and the rupee depreciated in the first half of 2012.

The rupee fell from 110 to 130 to the US dollar after the state took large volumes of bank credit to manipulate energy prices, which were then effectively accommodated by the Central Bank through sterilized foreign exchange sales when it tried to suppress interest rates.

Interest rates rose and the rupee fell from February 2012 after authorities took corrective action including an energy price hike.

Sri Lanka's vehicle imports, plunged in 2012 after the rupee fell and interest rates rose. Car purchases fell over 70 percent partly due to a prohibitive tax hike.
Kumarage told reporters that in previous cycles of instability interest rates were much higher. He said the commercial vehicle sales, which was the focus area of People's Leasing was less affected than cars.

Previously known as People's Leasing, the firm was re-branded People's Leasing Finance after it got a finance company license from the regulator. It will also merge with a finance company subsidiary it took under its wing during the last credit cycle.

Deputy general manager Sanjeewa Bandaranayake said monthly new lending has fallen from peaks of about 5.0 billion rupees in 2011 to about 3.0 billion in 2012 but the lending environment was stabilizing and demand was recovering.

People's Leasing would also make use of a lifting of withholding tax on listed corporate bonds to raise money next year. The firm is already a big player in debt markets and is an active seller of leased backed securities and commercial paper.

Kumarage said the firm planned to hedge about one third of the forex risk in syndicated loan through a swap, one third by borrowing in rupees against a dollar deposit. It would carry a position on the balance one third.

Sri Lanka's rupee is expected to strengthen in 2012 if the Central Bank does not print money and steadily trims its Treasury bill portfolio by outright sales.

Sri Lanka's rupee has fallen from 4.66 to the US dollar to 130 since a money printing central bank was created in 1951 abolishing a currency board which could not print money and kept the exchange rate fixed from 1880s.

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