Fitch affirms PLC at 'A-(lka)'

Fitch Ratings Lanka has affirmed Peoples Leasing. Trust 32's (PLC32) remaining Rs 30.1m lease-backed trust certificates (LBTCs) at 'A-(lka)'.

The outlook remains stable.

The Loss Severity rating remains at 'LS-3'.

The transaction is a securitisation of vehicle leases which were mortgaged to the trust.

The affirmation reflects the transaction's ultimate recourse to the originator of the trust, Peoples Leasing Company ('A-(lka)'/Stable), strong performance of the transaction, high levels of excess collateral (pool principal in excess of note principal as a percentage of note principal) and relatively strong quality of the collateral owing to the periodic replacement of overdue assets to date.

However, the rating remains constrained by the possible delay in enforcing the mortgage in the event the originator is liquidated, the lack of a liquidity reserve to meet note holder payments in this event, and the absence of a specified alternative servicer.

Debt service cover averaged 1.9x in the review period (May 2009 to May 2010), which is higher than the expected level at inception.

Replacements have resulted in excess collateral amounting to 382 percent and performing loans (loans less than three months in arrears) amounting to 98 percent of the collateral pool as at May 2010.

As a result, Fitch expects the strong performance of the transaction to continue till all the notes are expected to be fully repaid at legal final maturity in March 2011.