Fitch affirms Singer Finance’s ‘BBB (lka)’ rating

Fitch Ratings Lanka has affirmed the National Long-term rating of Singer Finance (Lanka) Limited (SF) at ‘BBB (lka)’. The outlook on the rating is stable.

The principal factor taken into consideration in SF’s rating is the implied support assumed to be available from its parent, Singer (Sri Lanka) Limited (Singer; senior unsecured notes rated ‘A+(lka)’/Negative Outlook).

Singer is the country’s largest retailer of consumer electronics and household appliances in terms of revenues and points of presence. SF is a wholly-owned subsidiary of Singer, and enjoys the usage of a common brand name with that of its parent.

The company provides strategic benefits to Singer in terms of financing its products, and by broadening and diversifying the group’s portfolio and funding channels.

Although the company has been growing rapidly since inception (FYE07: 68 per cent as opposed to 26 per cent for the sector), it is still a relatively small registered finance company (RFC) with an asset base of Rs. 1.1 billion at end-September 2007 (H108).

Growth has been primarily driven by vehicle finance (leases and hire purchase agreements), which accounted for 75 per cent of SF’s loan portfolio at H108.

The remainder of the portfolio consists of personal loans channelled via 25 Singer branches, and loans to employees of select corporates for the purchase of consumer durables from Singer’s branch and dealer network.