ICRA Lanka reaffirms ratings of First Capital Treasuries | Daily News


 

ICRA Lanka reaffirms ratings of First Capital Treasuries

ICRA Lanka Limited, subsidiary of ICRA Limited, a group company of Moody’s Investors Service, has reaffirmed the issuer rating of [SL] A- (pronounced SL A minus) with stable outlook for First Capital Treasuries PLC (FCT or “the Company”).

ICRA Lanka has also reaffirmed the issue rating of [SL]BBB+ (pronounced SL triple B plus) with stable outlook for the LKR 500Mn Subordinated Unsecured Redeemable Debenture programme of the company. Further, ICRA Lanka has assigned the issue rating of [SL]BBB+ (pronounced SL triple B plus) with stable outlook for the proposed Rs 750Mn Subordinated Unsecured Redeemable Debenture programme of FCT.

The ratings continue to factor in FCT’s position as one of the leading standalone primary dealers (PD) in Sri Lanka with an established track record, franchise and clientele. The ratings also take comfort from the low credit risk profile, as all the exposures are towards Government securities.

ICRA Lanka notes that while the portfolio has modest credit risk, it is however susceptible to adverse movements in interest rates. The ratings take note of the gearing which stood at 8.13 times in September 2019 (gearing adjusted for the deferred tax asset stood at 9.55 times) vis-à-vis 8.99 times in March 2019.

The capitalization is adequate with the total capital adequacy ratio standing at 15.0% as at September 2019 compared with 14.7% in March 2018; ICRA Lanka notes that capital adequacy has remained fairly stable despite an increase in the trading portfolio and duration during the same period (to 3.05 years from 1.49 years).


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