Sri Lanka People’s Leasing & Finance PLC has secured a final National Long-Term Rating of ‘BBB+(lka)’ from Fitch Ratings for its proposed subordinated listed debenture issuance valued at 10 billion rupees.
Fitch Ratings indicated that the proposed debentures are rated two levels lower than PLC’s National Long-Term Rating. This assessment is based on the agency’s standard notching for potential loss severity associated with this type of debt and the anticipated low recovery rates in case of a default.
The complete statement from Fitch is as follows:
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Fitch Ratings – Singapore/Colombo – September 7, 2026: The agency has assigned a final National Long-Term Rating of ‘BBB+(lka)’ to the proposed Sri Lankan rupee-denominated subordinated listed debentures from People’s Leasing & Finance PLC (PLC, A(lka)/Stable), which may reach up to LKR10 billion.
Key Rating Drivers:
The debentures are set to mature in five years and will be available on the Colombo Stock Exchange. The funds raised will be utilized to bolster PLC’s Tier 2 capital and ensure compliance with capital adequacy requirements.
This rating is established two notches below PLC’s National Long-Term Rating, reflecting Fitch’s baseline assessment for potential loss severity in this debt category and the anticipated low recovery rates in the event of default.
Fitch applied its Bank Rating Criteria to evaluate the proposed debentures, considering that the regulatory capital framework for Sri Lankan finance companies closely resembles that of banks. There was no additional notching for non-performance risk, as the proposed debentures lack going-concern loss-absorption features.
The final rating matches the expected rating assigned on May 8, 2026, and follows the submission of documentation that aligns with previously received information.
On January 24, 2025, PLC’s National Long-Term Rating was raised to ‘A(lka)’ from ‘A-(lka)’ after its parent company, People’s Bank (Sri Lanka), was upgraded from ‘A(lka)’ to ‘AA-(lka)’. PLC’s rating reflects Fitch’s expectation for extraordinary support from People’s Bank if necessary, due to the parent company’s majority ownership, PLC’s synergistic functions, and shared branding, although this is tempered by the subsidiary’s considerable size in relation to its parent.
For a comprehensive overview of PLC’s primary rating drivers and sensitivities, please refer to Fitch’s commentary titled “Fitch Upgrades 10 Sri Lankan NBFIs’ Ratings, Affirms 8 Following National Scale Recalibration,” published on January 24, 2025.
Rating Sensitivities:
Factors that could lead to a negative rating action or downgrade include a reduction in PLC’s National Long-Term Rating, which would subsequently impact the subordinated debt rating.
Conversely, an upgrade in PLC’s National Long-Term Rating would result in the upgrading of the subordinated debt rating.
The main sources of information utilized in this analysis are outlined in the Applicable Criteria.
Public ratings are linked to other ratings; specifically, PLC’s rating is connected to People’s Bank’s National Long-Term Rating.
