ICRA Lanka reaffirms the issuer rating of Janashakthi Limited | Daily News

ICRA Lanka reaffirms the issuer rating of Janashakthi Limited

ICRA Lanka Limited has reaffirmed the issuer rating of Janashakthi Limited to [SL]BB+ (pronounced SL double B plus). The outlook on the rating continues to be negative.

The rating factors in JL’s status as the parent entity of First Capital Holdings (FCH, rated [SL]A/Stable) and Janashakthi Insurance PLC (JIP); the healthy performance of these entities is expected to enable them to provide support to JL going forward, mainly in the form of dividend income.

However, the rating is constrained by the weak coverage indicators of the holding company, due to its high finance costs. The interest cover of the company stood at around 0.6x over the last 3 financial years, while the stand-alone net external debt level of the holding company remained high, at about LKR 17.6 billion as in March 2022.

ICRA Lanka expects the overall debt levels to remain elevated in the near term, while the coverage indicators are negatively affected by the sharp increase in systemic interest rates.

The rating continues to take comfort from the group’s long-standing relationships with banks and financial institutions in Sri Lanka, and its ability to refinance debt through these relationships.

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