Fitch revises Siyapatha Finance’s Outlook to negative; affirms at ‘A-(lka)’

Fitch Ratings Lanka has revised the rating Outlook on Siyapatha Finance PLC (Siyapatha) to negative from stable and affirmed its National Long-Term Rating at ‘A-(lka)’.

The agency has also affirmed the expected National Long-Term Rating on Siyapatha’s proposed senior unsecured redeemable debentures at ‘A-(lka)(EXP)’ and affirmed Siyapatha’s outstanding subordinated debentures at ‘BBB+(lka)’.

The rating action follows the revision of the Outlook on its parent, Sampath Bank PLC (Sampath), to Negative from Stable on 22 June 2016.

Fitch continues to believe that support for Siyapatha would be forthcoming from Sampath, if needed. This view is based on Sampath’s 100 percent ownership of Siyapatha and involvement in the strategic direction of Siyapatha through board representation.

Siyapatha is rated two notches below its parent because of Siyapatha’s limited role in the group’s core business. Sampath’s leasing book accounted for just 7 percent of group advances at end-2015, of which Siyapatha provided 33 percent. Siyapatha’s contribution to group profit also remains low.
Siyapatha’s proposed senior debentures are rated at the same level as Siyapatha’s National Long-Term Rating. The issue ranks equally with the claims of the company’s other senior unsecured creditors.

Siyapatha’s subordinated debentures are rated one notch below Siyapatha’s National Long-Term Rating to reflect their subordination to senior unsecured debt.