Fitch rates Asia Asset Finance’s outstanding secured debentures at ‘A+(lka)’

Fitch Ratings has assigned Asia Asset Finance PLC’s (AAF, A+(lka)/Stable) outstanding Sri Lanka rupee-denominated secured (asset backed) debentures a National Long-Term Rating at ‘A+(lka)’. 
The debentures will mature in 2026 and have a total outstanding face value of Rs.565.25 million as of October 15, 2024. They are listed on the Colombo Stock Exchange.
“The secured debentures are rated at the same level as AAF’s National Long-Term Rating in accordance with Fitch’s criteria. This is because the secured debenture holders rank higher in priority to all other unsecured creditors and any preference and ordinary shareholders of the company,” the rating agency said.
Fitch has not provided any rating uplift for the asset-backed securities, as the recovery prospects are assessed to be average and comparable to those of AAF’s unsecured debt under Sri Lanka’s developing legal system. A default by AAF would constitute an event of default on the debentures.
AAF’s National Long-Term Rating reflects Fitch’s expectation that its India-based parent, Muthoot Finance Ltd (MFL, BB/Stable), would provide extraordinary support to the Sri Lankan subsidiary, if needed. AAF’s standalone credit profile does not drive its National Long-Term Rating and is assessed to be materially weaker than its support-driven rating.