Financial Times

Singer Finance gets ‘BBB (sri)’ rating from Fitch
Singer Finance has been assigned a ‘BBB (sri)’ national Senior Unsecured Long-term rating from Fitch Ratings, the ratings agency said.

This rating indicates that there is currently a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered adequate but adverse changes in circumstances and in economic conditions are more likely to impair this capacity.

The principle factor supporting FRL’s rating of SF is the implied support from its parent Singer (Sri Lanka) Ltd (SSL) (SSL’s senior unsecured debentures are rated ‘A+ (sri)’ by FRL).

In addition to being wholly owned by SSL and the use of a common brand name, SF also provides SSL with strategic benefits. SSL is a leading consumer durable retailer in Sri Lanka and actively offers consumer financing to support sales.

It has built a sizeable portfolio of hire purchase (HP) receivables which is financed through a combination of bank borrowings and bond issuances.
A key objective of establishing SF is to broaden and diversify the group’s funding base.

The operations of SF are closely linked with that of SSL.
Fitch said SF is expected to leverage off the well established Singer franchise to mobilise deposits.

Financing consumer durables would be a core activity of the company, where SF would benefit from the expertise and network of its parent. SF also provides lease and HP facilities for vehicles.

While experienced managers have been secured for these activities, developing adequate systems and requisite competencies is likely to take time.
Deposit growth at SF has been slow but is expected to pick up with promotions and the expansion of its network.

In the interim, the company will rely on medium-term bank borrowings to fund anticipated loan growth.
SF’s current capital position is comfortable on account of its small asset base.
However, as internal capital generation is unlikely to be sufficient, equity infusions from SSL will be necessary to support loan growth.

SF complies with the current minimum capital requirement of Rs 100 million for registered finance companies.

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