Fitch rates People's Leasing's proposed Rs 500 m CP at 'F1(lka)'

Fitch Ratings Lanka has assigned People's Leasing Company Plc's (PLC, 'A+(lka)'/Stable) proposed commercial paper (CP) issue of up to Rs. 500 million a 'F1(lka)' National Short-Term rating.This issue enhances the previous Rs. 1 billion issuance which was rated 'F1(lka)' on March 23 ,2012, taking the total issuance to Rs. 1.5 billion.

This new issue will be utilised to finance PLC's working capital and lending. The enhanced issue will increase PLC's CP-funded assets to about 9% based on March 31, 2012 assets, compared with 7% as at end-December 2011.

PLC's ratings reflect Fitch's view that its parent, People's Bank (PB,'AA(lka)'/Stable), is likely to extend support in a stressed scenario, if required. This view is underpinned by PB's majority ownership of PLC ( December 31, 2011: 71.5%), common board representation, PLC group's significant profit contribution to PB's consolidated profile (end-September 2011: 36% of PB group profits), and the strong strategic and operational linkages between the companies.

An 'F1(lka)' category short-term rating indicates the strongest capacity for timely payment of financial commitments relative to other issuers or obligations in the same country. Under Fitch's National Rating scale, this rating is assigned to the lowest default risk relative to others in the same country.