National Short-term Rating for LOLC's Proposed Commercial Paper Issue

Lanka Orix Leasing Company (LOLC) Plc's proposed commercial paper issuance of up to Rs 500 million has been assigned a national short-term rating of 'F1(lka)' Fitch Ratings Lanka, the ratings agency said.

A National Short-term rating of 'F1(lka)' indicates the strongest capacity for timely payment of short term financial commitments relative to other issuers or issues in the same country.

The assigned rating reflects the absence of an adverse shift in the maturities of the company's interest bearing assets and liabilities, as well as its good access to borrowings from local banks.

“Fitch also takes comfort from the level of committed but undrawn funding lines that the company maintains, which as at 24 January 2008 amounted to Rs 620 million or the principal of the proposed issuance.

However, the short-term rating on the notes is constrained by LOLC's inability, as a non-bank financial institution, to access the liquidity window of the Central Bank of Sri Lanka. The rating on the notes is also credit linked to LOLC's National Long-term rating of 'A(lka)'/Stable, and could be affected by changes to the latter,” the statement said.

Raja Nanayakkara and his family acquired a controlling interest in LOLC in 2002 and currently hold over 54% of its equity, while ORIX and the general public hold 30% and 16%, respectively.