Fitch Ratings-Colombo/Mumbai/Singapore-01 February 2008:Fitch Ratings Lanka has today assigned a National Short-term rating of ‘F1(lka)’to Lanka Orix Leasing Company (LOLC) Plc’s proposed commercial paper issuance of up to LKR500 million.
A National Short-term rating of ‘F1(lka)’ indicates the strongest capacity for timely payment of short term financial commitments relative to other issuers or issues in the same country. Where the credit risk is particularly strong, a “+” is added to the assigned rating within the ‘F1’ category.
The assigned rating reflects the absence of an adverse shift in the maturities of the company’s interest bearing assets and liabilities, as well as its good access to borrowings from local banks. Fitch also takes comfort from the level of committed but undrawn funding lines that the company maintains, which as at 24 January 2008 amounted to LKR620m, or1.24x the principal of the proposed issuance. However, the Short-term rating on the notes is constrained by LOLC’s inability, as a non-bank financial institution, to access the liquidity window of the Central Bank of Sri Lanka.The rating on the notes is also credit linked to LOLC’s National Long-term rating of ‘A(lka)’/Stable, andcould be affected by changes to the latter.
LOLC is Sri Lanka’s pioneer specialised leasing company and was founded in 1980. Mr. Raja Nanayakkaraand his family acquired a controlling interest in LOLC in 2002 and currently hold over 54% of its equity, while ORIX and the general public hold 30% and 16%, respectively.