ICRA Lanka revises Hayleys rating

ICRA Lanka has revised down the issuer rating of Hayleys PLC to (SL)A+ with Stable outlook from (SL)AA- with Negative outlook over the firm’s non improvement of financial performance and high level of gearing.

ICRA Lanka, a group company of Moody’s Investors Services, has also assigned the issue rating of (SL)A+ with Stable outlook for the proposed senior unsecured redeemable Rs.3 billion debenture issue of Hayleys, which is to be listed on the Colombo Stock Exchange.

“The rating revisions is on account of non-improvement of financial performance and capital structure and coverage indicators of the company during FY19 and significant moderation in market buffer over the book value of Hayleys investments in publicly listed subsidiaries,” ICRA Lanka said. 

The rating agency pointed out that Hayleys PLC’s debt to equity ratio has increased to 2.0 times in FY19 year from 1.7 times the year before.

The capital structure and coverage indicators of the company were adversely impacted during FY2018 due to large debt-funded acquisition of Singer (Sri Lanka) PLC. “The timely execution of fund raising plans to deleverage as well as improvement in financial performance of the group will be critical for improvement in credit profile and to avoid any further downward pressure on ratings,” the rating agency said. 

 “Conversely, if the company demonstrates a healthy improvement in gearing and financial performance of the group, leading to healthy dividend upstreaming to the company, given the timely fund raising exercise as envisaged, there could be upward revisions in ratings,” it added.