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| Monday, 17 January 2005 |
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Fitch affirms Hayleys AA+ (sri) rating - outlook changed Fitch Ratings Lanka Ltd (FRL) affirmed the national senior unsecured long-term rating of Hayleys Limited (Hayleys) of AA+ (sri). However, the Outlook has been changed to Negative from Stable. The Negative Outlook does not imply that a rating change is inevitable, but indicates that the rating may be lowered over a one to two-year period if the creditor protection measures do not improve or if they deteriorate further. The current rating of AA+ (sri) denotes a very low expectation of credit risk. It indicates very strong capacity for timely payment of financial commitments and is not significantly vulnerable to foreseeable events. This rating action largely reflects the substantial increase in debt within the group and the weakened credit metrics, which at present are lower than what would normally be expected for the current rating category. The group recently made significant investments in a number of sectors that include ships, power generation and medical glove manufacturing facilities among others, which were largely financed by debt. In addition to the fact that these investments were made within a relatively short span of time, the limited equity infusions and the availability of low-cost credit facilities have induced a large portion of the recent investments to be met through bank borrowings. |
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