ECONOMYENXT – People’s Leasing & Finance, a financial institution based in Sri Lanka, has been assigned an anticipated National Long-Term Rating of BBB+(lka)(EXP) for its planned subordinated debenture issue amounting to 10 billion rupees by Fitch Ratings.
The ratings agency indicated that it applied its Bank Rating Criteria to assess the debentures, as the regulatory capital framework governing Sri Lankan finance companies closely resembles that of banks. Furthermore, it noted that there is no additional notching for non-performance risk since the proposed debentures lack features that allow for loss absorption in the event of financial distress.
In a statement from Fitch Ratings dated May 8, 2026, the agency affirmed that People’s Leasing & Finance PLC’s (PLC, A(lka)/Stable) proposed Sri Lankan rupee-denominated subordinated listed debenture issue of up to LKR 10 billion has been assigned an expected National Long-Term Rating of ‘BBB+(lka)(EXP)’.
Key details regarding the proposed debentures include a five-year maturity period and plans for listing on the Colombo Stock Exchange. The funds raised will be utilized to bolster the company’s Tier 2 capital and facilitate loan expansion.
The final rating is contingent upon the receipt of conclusive documentation that aligns with the information already provided. The proposed debentures are rated two levels below PLC’s National Long-Term Rating, reflecting the expected loss severity associated with this class of debt and the anticipated low recovery rates in the event of default.
Fitch Ratings employed its Bank Rating Criteria for this evaluation, as it views the prudential capital frameworks of finance companies in Sri Lanka as comparable to those of banks. No additional notching for non-performance risk was warranted, given the absence of loss-absorption mechanisms in the proposed debentures.
On January 24, 2025, PLC’s National Long-Term Rating was upgraded from ‘A-(lka)’ to ‘A(lka)’ following a similar upgrade of its parent company, People’s Bank (Sri Lanka) (PB), from ‘A(lka)’ to ‘AA-(lka)’. The rating for PLC reflects Fitch’s expectation of potential extraordinary support from PB, attributable to PB’s majority ownership, the synergistic relationship between the two entities, and shared branding. However, this support-driven rating is assessed to be two notches below that of PB due to PLC’s size relative to PB, which impacts its standalone credit profile.
For further insight into PLC’s key rating drivers and sensitivities, please refer to Fitch’s publication titled “Fitch Upgrades 10 Sri Lankan NBFIs’ Ratings, Affirms 8 Following National Scale Recalibration,” released on January 24, 2025.
RATING SENSITIVITIES
Factors that may lead to a negative rating action or downgrade include a decline in PLC’s National Long-Term Rating, which would subsequently affect the rating of the expected subordinated debt.
Conversely, an upgrade of PLC’s National Long-Term Rating would result in a corresponding upgrade of the expected subordinated debt rating.
The fundamental sources of information utilized in this analysis are outlined in the Applicable Criteria. Additionally, PLC’s rating is linked to the National Long-Term Rating of PB.
