Fitch Ratings Lanka has affirmed Singer Finance (Lanka) PLC's SFL's National Long-Term Rating of 'BBB(lka)' with a Stable Outlook. The agency has also affirmed SFL's senior debentures at 'BBB(lka)'.
SFL rating reflects Fitch's view that support would be forthcoming from its parent, Singer (Sri Lanka) PLC (SSLP; 'A-(lka)'/Stable), if needed, given the strategic importance of SFL to SSLP. This view is premised on the common Singer brand; SSLP's majority shareholding; board representation; the financing by SFL of some of SSLP's products; and demonstration of support in the past in the form of equity injection and borrowings. However, there is a two-notch rating differential between SSLP and SFL, as Fitch believes SFL is not a core subsidiary of SSLP, contributing an average of 29% to group pre-tax profit for the four years from 2010 to 2013. Moreover, most of SFL's financing exposure is related to non-Singer-branded products.
SFL's rating also reflects its standalone credit profile which Fitch has assessed to be at the same level as its National Long-Term Rating. SFL's standalone credit profile reflects better capitalisation levels, modest profitability and satisfactory asset-quality when compared with similarly rated domestic peers.
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 assets and liabilities are better matched than peers. SFL issued LKR1,250m of listed senior unsecured redeemable debentures in 2013 which supported the lengthening of its liability maturities and better matching of its asset and liability maturities. SFL is mainly funded by deposits which accounted to 55% of assets at end 1Q15.