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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Sri Lanka Senkadagala Finance to sell Rs1bn in debt

Sri Lanka Senkadagala Finance to sell Rs1bn in debt

3 posters

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics

Apr 18, 2013 (LBO) - Sri Lanka's Senkadagala Finance Plc (SFC) will sell one billion rupees of 3 and 4-year debt which have been given an expected 'BBB+(lka)' rating, Fitch Ratings said.

The rating has a stable outlook. BBB+(lka) is an investment grade rating.

"The proposed debentures will be issued in two tranches with a maturity of three and four years, while coupon payments will be at fixed and floating rates," Fitch Ratings said.

"The notes do not contain any deferral clauses. SFC expects to use the proceeds to fund its ongoing lending activities and to help reduce maturity mismatches between its assets and liabilities."

Fitch said the rating reflected the finance company's long operating history and sound credit profile through economic cycles, supported by credit controls, low refinancing risk and high profitability compared with domestic peers.

But its profile was constrained by elevated financial risk, shown in lower capital adequacy. as reflected in lower capitalisation in 2012, the rating agency said.

But its Tier 1 CAR (after including retained profits) had improved to an estimated 14.4 percent during the first nine months of the 2013 financial year from 11.5 percent in 2012.

The full statement is reproduced below:

Fitch Rates Senkadagala Finance's Proposed Senior Debt at 'BBB+(lka)(EXP)'

Fitch Ratings-Colombo/Mumbai/Singapore-18 April 2013: Fitch Ratings has assigned Sri Lanka-based Senkadagala Finance PLC's (SFC; BBB+(lka)/Stable) proposed issue of senior unsecured redeemable listed debentures of up to LKR1bn an expected National Long-Term rating of 'BBB+(lka)(EXP)'. SFC will issue the debentures subject to receiving the necessary regulatory approvals.

The final rating is contingent upon the receipt of final documentation conforming to information already received, including details regarding the amount and tenor.

Rating Action Rationale
The proposed debentures are rated at the same level as SFC's National Long-Term rating as they will constitute direct, unconditional, unsecured and unsubordinated obligations of the bank.

The proposed debentures will be issued in two tranches with a maturity of three and four years, while coupon payments will be at fixed and floating rates. The notes do not contain any deferral clauses. SFC expects to use the proceeds to fund its ongoing lending activities and to help reduce maturity mismatches between its assets and liabilities.

Key Rating Drivers
SFC's rating reflects its long operating history and sound credit profile through economic cycles, supported by credit controls, low refinancing risk and high profitability compared with domestic peers.

SFC's credit profile is constrained by its elevated financial risk, as reflected in lower capitalisation - measured by its Tier 1 capital adequacy ratio (CAR) and equity/assets ratio - during the financial year ended March 2012. Tier 1 CAR (after including retained profits) improved to an estimated 14.4% during 9MFY13 (FY12: 11.5%) as the rate of internal capital generation kept pace with asset growth.

SFC relies to a large extent on secured borrowings to fund its lending activities, which has helped the company to reduce refinancing risk. However, over-reliance on secured borrowings can limit SFC's future financing flexibility to the extent of unencumbered assets on its balance sheet, and may also reduce recovery prospects of its unsecured creditors in the event of liquidation. SFC's ratio of unencumbered assets/unsecured liabilities was 1.2x at end-9MFY13, which is low compared with that of domestic peers.

Rating Sensitivities
A continued weakening in SFC's capitalisation or financial flexibility as indicated by a further reduction of unencumbered assets relative to unsecured liabilities could lead to a downgrade.

An upgrade of SFC's rating is contingent upon the company strengthening its franchise and improving its capitalisation to levels commensurate with higher-rated peers, while maintaining satisfactory asset quality and profitability.

http://www.lankabusinessonline.com/news/Sri_Lanka_Senkadagala_Finance_to_sell_Rs1bn_in_debt/1727554061

Gaudente


Manager - Equity Analytics
Manager - Equity Analytics

any news about the coupon rate ?

sriranga

sriranga
Co-Admin

Sri Lanka Senkadagala Finance to sell Rs1bn in debt Deb110

More details:
http://www.cse.lk/pdf/PROSPECTUS-SF[2013].pdf

http://sharemarket-srilanka.blogspot.co.uk/

Gaudente


Manager - Equity Analytics
Manager - Equity Analytics

The following period in the prospectus is not clear:

Applications will NOT be accepted from foreign citizens, non-residents and individuals under the age of eighteen (18) years,

Do they mean that all foreigners and non residents (and resident citizens below 18 years) are not allowed to apply ; or just that foreigners below 18 years , non residents below 18 years and individuals below 18years are not allowed ?

If foreigners are not allowed, why on the application form there are boxes for non lankan nationality and non residents ?

Gaudente


Manager - Equity Analytics
Manager - Equity Analytics

been to their offices today and it turns out it is not possible. I will apply to Singer issue only then Crying or Very sad

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