Fitch Ratings has issued a final National Long-Term Rating of ‘BBB+(lka)’ for the proposed issuance of subordinated listed debentures by People’s Leasing & Finance PLC (PLC) in Sri Lanka, with a total value of up to LKR 10 billion. This rating reflects the company’s stable outlook.
The debentures are set to mature in five years and will be available on the Colombo Stock Exchange. The funds raised from this issuance will be utilized to bolster PLC’s Tier 2 capital and ensure compliance with capital adequacy requirements.
These debentures carry a rating that is two notches lower than PLC’s National Long-Term Rating. This rating adjustment accounts for the anticipated loss severity associated with this class of debt, as well as expectations of limited recoveries in the event of a default.
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Fitch applied its Bank Rating Criteria to assess the proposed debentures, as the regulatory capital framework governing Sri Lankan finance companies closely aligns with that of banks. There is no additional consideration for non-performance risk, given that the debentures do not feature loss-absorption mechanisms related to ongoing operations.
The final rating aligns with the expected rating released on May 8, 2026, following the submission of documentation that confirmed previously received information.
On January 24, 2025, PLC’s National Long-Term Rating was upgraded from ‘A-(lka)’ to ‘A(lka)’ after its parent company, People’s Bank (Sri Lanka), received an upgrade from ‘A(lka)’ to ‘AA-(lka)’. PLC’s rating reflects Fitch’s view that the parent company would provide extraordinary support if necessary, due to its majority ownership, the synergistic relationship between the two entities, and shared branding, albeit balanced by the subsidiary’s considerable size in relation to People’s Bank.
For further details on key rating drivers and sensitivities, please refer to the report 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 affect the rating of the subordinated debt.
Conversely, an upgrade in PLC’s National Long-Term Rating would result in an enhanced rating for the subordinated debt.
The primary sources of information utilized in this analysis are outlined in the Applicable Criteria.
Source: Financial Chronicle Biz English | Sri Lanka Business News.
