Lanka Rating Agency
29-Oct-24
Analyst
Gayani Randima Ariyawansa
gayani@lra.com.lk
+94 114 500099
www.lra.com.lk
Applicable Criteria
- Methodology | Debt Instrument Rating | Aug-24
Related Research
- Sector Study | Leasing & Finance Companies | Aug-24
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Lanka Rating Withdraws the Debt Instrument Rating of Asia Asset Finance PLC LKR 01Bn Asset Backed Secured Debenture (2)
| Rating Type | Debt Instrument | |
|
Current (29-Oct-24) |
Previous (27-Jan-23) |
|
| Action | Withdraw | Initial |
| Long Term | - | A |
| Outlook | Stable | |
| Rating Watch | - | - |
Subsequent to the management's decision to discontinue the rating, Lanka Rating withdraws the Debt Instrument Rating of Asia Asset Finance PLC LKR 01Bn Asset Backed Secured Debenture (2) with immediate effect.
About
the Entity
Asia Asset Finance PLC is a public limited liability company incorporated and domiciled in Sri Lanka and listed on the Colombo Stock Exchange. In 2014 AAF was acquired by MFL of India, and it had a 73% stake in the Company as of FY23. The principal activities of AAF comprise gold loans, SME loans, leasing, micro finance, personal loans, and pledge loans. The Board of Directors consists of eight members of which three are Non-Independent and Non- Executives Directors and four are Independent and Non-Executive Directors. The remaining is the Chief Executive Officer, Mr. Rajiv Gunawardena, who heads the management team, and he has held the current position as the CEO for about 12 years.
About
the Instrument
AAF has issued LKR 1Bn, listed, rated, secured (asset backed), redeemable debentures each worth LKR 100 in 2021 with a tenure of 3 years and 5 years. The debentures are secured against gold loan facilities of certain branches up to 120% of the face value. The debenture has two types namely, i) Type A, ii) Type B, iii) Type C, iv) Type D. The objective of the issue is for the purpose of supporting the gold loan portfolio. Coupon rates are; type A - 8.76% (annual), type B - 1 year T.Bill rate plus 3.32% (monthly), type C – 9.26% (annual) and type D - 1 year T.Bill rate plus 4.15% (annual). The first coupon payment started in August 2022 and the last payment will go out in August 2024 and August 2026. The capital repayment will be as a bullet payment.