LANKA RATING ASSIGNS


Preliminary Debt Instrument Rating to

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Fixed Income Investment I (Pvt) Ltd – Trust 10

30-May-25

01

Applicable Criteria

Methodology | Debt Instrument Rating | Aug-24

02

Related Research

Sector Study | Capital Markets | May-24


03

Analyst

Ruwanthi Sylva | ruwanthi@lra.com.lk
+94 114 500099 | www.lra.com.lk

PRESS
RELEASE

DISCLAIMER

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to LRA

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Rating Type Debt Instrument
Current
(30-May-25)
Action Preliminary
Rating AA
Outlook Stable
Rating Watch -


Fixed Income Investment I (Pvt) Ltd – Trust 10 is a Special Purpose Vehicle ("SPV") incorporated to securitize Treasury Bond up to LKR~658.381mn Face Value. The rating reflects the robust securitization structure that ensures regular interest and principal repayments to the investors. The rating incorporates key risk (Interest rate change) being borne by the investors. The credit risk is considered very low as the securitization is for the Government of Sri Lanka's long-term fixed-rate Treasury Bond (less than 10 years maturity). Interest rate fluctuations, if any, are likely to impact the value of the bond, giving rise to market risk. This risk, along with early repayment, will be undertaken by the investors, as clearly mentioned in the offering document. Under the current scenario of stabilized interest rates, the bond remains exposed to moderate market risk. However, in case of increase in interest rates, the value of the bond will be affected. This may also impact liquidity of the bond as well. The entire transaction will be routed through a trustee to ensure timely and secure payments. Furthermore, LRA also takes into account the ability of the Treasury Bond securitization promoter (Capital Alliance Holdings Limited). The promoter's experience in managing funds and Capital Markets is expected to facilitate its smooth execution.
There is a built-in curing period (3 days), in case a payment is missed. The investors will receive fixed returns only if they hold their positions until maturity and not in the case of early redemption. Every ~90th day, the investors will have the option to roll over or pre-terminate the bond at market value. The average return on the trust certificates offered by the Treasury Bond securitization stands at ~10.10% and ~10.11%, which will be provided only if the instrument is held to maturity. All settlements would be made through the Fixed Income Investment I (Pvt) Ltd – Trust 10 account maintained with the Trustee (People's Bank). All settlements would be made under the direct supervision of the Trustee. Until all the agreed payments are made to the trust receipt owners, any excess amount will not be withdrawn. The Trustee will ensure timely payments and other legal aspects of the transaction. The rating of the SPV depends on the timely payments of the interest and principal amount of the Treasury Bond securitization. Going forward, the probability of occurrence of a triggering event that may lead to a risk of non-payment of interest and/or principal to the investors, will be closely surveilled.
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About the Entity

Fixed Income Investment I (Pvt) Ltd – Trust 10 (“the Company”), a Special Purpose Vehicle (SPV), was incorporated under the Companies Act No.07 of 2007. The registered office of the Company is situated at level 5, Millennium House, No 46/58, Nawam Mawatha, Colombo 02. The Company is a ~100% owned subsidiary of CAL Holdings Limited. The ultimate majority ownership of CAL Holdings remains with Mr. W.A.T. Fernando (through Ashthi Holdings (Pvt.) Limited) and Ms. Shiromal Cooray (through Jetwing Travels (Pvt.) Ltd).


About the Instrument

The Company will buy Treasury Bonds to securitize them and issue trust receipts to investors against these securitized bonds. The total size of the securitization is LKR~658.381Mn (Face Value) with annualized returns of ~10.10% and ~10.11% on the trust certificates, if held to maturity.

Lanka Rating Agency Limited

No. 145,
Kynsey Road, Colombo 00800, Sri Lanka

Tel: +94 11 450 0099

Web: http://lra.com.lk

E-mail: info@lra.com.lk