Aitken Spence gets AA(lka) rating

Fitch Ratings has affirmed Sri Lanka’s Aitken Spence PLC’s (ASP) senior unsecured notes at National Long-term ‘AA(lka)’. The outlook is stable.

The rating reflects the strong operating cash generational ability of ASP’s core business segments, the geographical diversification of its revenue and profit streams, and the low leverage in two of its business segments.

Although ASP is expected to increase its debt at the group and holding-company level as at FYE10 (holding company by Rs. 2 bn), Fitch notes that scheduled debt repayments (FY11: Rs.2.2bn) are expected to reduce leverage over the medium-term.

The debt repayments, coupled with the stable and strong dividend receipts from the power sector (accounting for most of ASP’s Q310 dividend) and expected improvements in its Sri Lankan tourism assets, underpin the rating and the outlook.

Constraining ASP’s rating is its exposure to the state-owned and financially weak Ceylon Electricity Board (CEB) which is the sole purchaser of ASP’s power output.