Sri Lanka’s Abans’ proposed debt rated ‘A-(lka)’
Abans proposed debt rated by Fitch
One of Sri Lanka’s largest consumer durable firms Abans proposed Rs. 500 million debenture has been rated at “A-(lka)’ by Fitch Ratings Lanka.
Fitch says, the ratings of Abans Private Limited’s proposed senior unsecured debenture issue reflects the firms strong market position as one of Sri Lanka’s largest retailers of consumer durables.
The rating firm says, this is supported by the retailers brand, its extensive retail and distribution network
However it says, the rating is constrained by the company’s evolving corporate governance profile.
“The debenture is expected to be issued at a fixed coupon rate with a bullet principal repayment in four years” added Fitch Ratings Lanka Limited.
According to the agency, Abans will use the proceeds to refinance existing short-term debt and to fund working capital.
“The refinancing of short-term debt will help Abans to improve its liquidity position, while the fixed coupon interest repayments will reduce future earnings volatility if market interest rates rise” The agency further points out.
According to Fitch Ratings, at end-September 2011, the total group debt of the company has mounted to Rs. 4.83 billion.
It also points out that Abans’ overall financial performance improved, as expected, in 2011 on the back of a revival in economic activity and the removal of import duties and levies across most of its products in 2010.
