Sri Lankan shares hit 6-wk closing low in lacklustre trade

(Reuters) - Sri Lankan shares closed at a six-week low on Friday amid concerns a rise in interest rates could turn investors away from stocks and into fixed income assets, brokers said.

Finance Minister Ravi Karunanayake however told Reuters after market hours that he believed interest rates should fall following the central bank decision to float the rupee currency on Friday.

The currency fell 3 percent to hit a record low of 139.00 against the dollar.

The main stock index ended 0.42 percent lower, or 30.39 points weaker, at 7,215.11, its lowest close since July 23. The index fell 1.8 percent on the week, its third straight weekly decline.

"Today's equities wrapped up in red in lacklustre trade. Investors are waiting till proper economic reforms are put forward," SC Securities (Pvt) Ltd said in a note to investors.

"Volatility in global equities persisted and the emerging currencies weakened, as investors exited before U.S payrolls data on Friday."

Analysts said the central bank's move to float the rupee also put investors on a wait-and-see mode.

Foreign investors bought 190.4 million rupees ($1.38 million) worth of shares on Friday, but they have sold a net 3.49 billion rupees so far this year.

Turnover stood at 540.1 million rupees, around half of this year's daily average of 1.15 billion rupees.

Shares in Ceylon Tobacco Company Plc fell 1.89 percent, dragging the index down. 

($1 = 137.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Sri Lanka HNB Senior and Subordinated Debt gets AA-, A+ ratings :Fitch

(LBO) – Fitch Ratings has assigned Hatton National Bank proposed senior unsecured and subordinated debentures a expected National Long-Term Ratings of ‘AA-(lka)(EXP)’ and ‘A+(lka)(EXP) respectively.

Full Statement follows:

Fitch Ratings has assigned Hatton National Bank PLC’s (HNB; AA-(lka)/Stable) proposed senior unsecured and subordinated debentures expected National Long-Term Ratings of ‘AA-(lka)(EXP)’ and ‘A+(lka)(EXP) respectively.

The issuance is to total LKR10bn, with the debentures to mature in five years and carry fixed coupons. The debentures are to be listed on the Colombo Stock Exchange. HNB expects to use the proceeds to reduce asset and liability maturity mismatches while improving its Tier II capital base.

The final rating is subject to the receipt of final documentation conforming to information already received.

KEY RATING DRIVERS

The proposed senior debentures are rated at the same level as HNB’s National Long-Term Rating in accordance with Fitch’s criteria as they constitute unsecured and unsubordinated obligations of the bank.

The proposed subordinated debentures are rated one notch below its National Long-Term Rating to reflect the subordination to its senior unsecured obligations.

HNB’s rating reflects its strong franchise, satisfactory capitalisation, established track record and higher risk appetite compared to better-rated peers.

RATING SENSITIVITIES

The ratings on the proposed debentures will move in tandem with HNB’s National Long-Term Rating. Upside potential for HNB’s ratings stems from a lower risk appetite and sustained improvements in its financial profile, in particular asset quality and funding. A material increase in risk taking, unless sufficiently mitigated through capital and financial performance, could result in a rating downgrade.

Sri Lanka’s Bank of Ceylon to sell Rs8 bn debt, AA rating

(LBO) – Sri Lanka’s Bank of Ceylon, state run bank is to sell up to 8.0 billion rupees of 5 and 8-year subordinated debt which have given final National Long-Term Rating of ‘AA(lka)’, Fitch Ratings said.

The full statement given below :-

Fitch Ratings has today assigned Bank of Ceylon’s (BOC; AA+(lka)/Stable) proposed up to LKR8bn of subordinated debentures a final National Long-Term Rating of ‘AA(lka)’.

The assignment of the final rating follows the receipt of documents conforming to information already received, and the final rating is the same as the expected ratings assigned on 17 July 2015.

The proposed subordinated debentures, which will have tenors of five and eight years and carry fixed and floating coupons, will be listed on the Colombo Stock Exchange. BOC plans to use the proceeds to strengthen its Tier 2 capital base and reduce asset and liability maturity mismatches.

Sri Lanka’s state-run Bank of Ceylon will sell up to 8.0 billion rupees of 5 and 8-year debt which have been rated ‘AA(lka)’, Fitch Ratings said.

KEY RATING DRIVERS

The proposed subordinated debentures are rated one notch below BOC’s National Long-Term Rating to reflect the subordination to senior unsecured creditors.

The issuer rating is driven by Fitch’s expectation of extraordinary support from the government of Sri Lanka (BB-/Stable). This stems from BOC’s high systemic importance, quasi-sovereign status, role as a key lender to government, and full state ownership. The Stable Outlook on BOC reflects the Stable Outlook on the sovereign’s rating.

RATING SENSITIVITIES

Any change in BOC’s National Long-Term Rating will affect the issue rating to the same extent.

Any change in Sri Lanka’s sovereign rating, or in the perception of state support to BOC, could result in a change in the ratings of BOC. Visible demonstration of preferential support for BOC in the form of an explicit guarantee will be instrumental to an upgrade of its National Long-Term Rating.

A full list of BOC’s ratings follows:

Long-Term Foreign-Currency IDR: ‘BB-‘; Outlook Stable

Long-Term Local-Currency IDR: ‘BB-‘; Outlook Stable

Short-Term Foreign-Currency IDR: ‘B’

Viability Rating: ‘b+’

Support Rating: ‘3’

Support Rating Floor: ‘BB-‘

US dollar senior unsecured notes: ‘BB-‘

National Long-Term Rating: ‘AA+(lka)'; Outlook Stable

Basel II-compliant Sri Lanka rupee-denominated subordinated debentures: ‘AA(lka)’

Proposed Basel II-compliant Sri Lanka rupee-denominated subordinated debentures: ‘AA(lka)’

Sri Lanka tourist arrivals up by 18.7 percent in August 2015

Tourist Arrival by Month

Tourist Arrival by Country of Residence

Tourist Arrivals by Region and Top 10 Countries

Source: www.sltda.lk

Sri Lanka central bank says will float rupee from Friday-market sources

(Reuters) - The Sri Lankan central bank will allow the rupee to float from Friday by not quoting a specific level in the market, the bank has told currency dealers, according to sources who had knowledge of their meeting.

"The official said the central bank will allow the market to decide the exchange rate by not guiding with a specific rate. However, he said the bank will intervene if the levels are too high," a source told Reuters.

Three other market sources confirmed the move.

Central Bank Deputy Governor Nanadalal Weerasinghe, when asked, did not comment about chairing the meeting with currency dealers nor on any decision to float the rupee.

But he told Reuters in a text message. "We will intervene if there will be excess volatility."

The central bank on Thursday said it received $1.1 billion from a $1.5 billion swap agreement with the Reserve Bank of India (RBI) and it expected the rupee exchange rate to stabilise.

The central bank usually directs the market via state banks' dollar trade. The rupee hit a record low of 134.75 per dollar on Thursday, after a state bank raised the currency's peg against the dollar by 25 cents to allow the exchange rate to depreciate and sold it at the same rate.

The rupee, which has fallen 2.7 percent so far this year, has been under heavy downward pressure due to strong importer dollar demand under a lower interest rate regime.

Vidullanka gets US$ 4.5 m for Uganda project

Muvumbe Hydro (U) Limited, a wholly owned subsidiary of Vidullanka PLC, has entered into an Implementation agreement with the Ministry of Energy and Mineral Development on behalf of Government of Uganda.

Accordingly the company, investors and financing institutions arc entitled to improved investment protection from the Government of Uganda.

A Developer Financing Agreement with KFW Bank of Germany on behalf of the Government of Uganda, under the Lighting Africa program, too was formulated. The company will be entitled to receive a grant of US$.4.5mn during the first 5 years of commercial operation of the Muvumbe Small Hydro Power Plant.
www.dailynews.lk

Nation Lanka to go for a rights issue

Nation Lanka Chairman Jayantha Dharmadasa said all arrangements are in place for a rights issue in the new financial year (2015/2016). "This move will be reinforced by the proposed Rs 500 million subordinated debenture issue that will provide funding for planned business expansion," he said.In addition, oversight and control measures are in the process of being further strengthened to elicit greater financial discipline, as the company moves ahead with its growth plans.
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Bad year for Mercantile Shipping

Mercantile Shipping Company PLC Group has made a net loss of Rs. 348.9 million after tax, having provided for substantial exchange losses aggregating to Rs. 219.9 Million compared to a net loss of Rs. 185.7 million last year.

The company showed a loss after tax of Rs. 260.0 Million after the provision made for the write-off of the investment of Rs. 237.6 Million in Mercantile Emerald Shipping (Pvt) Ltd. This is in comparison to a net loss after tax last year of Rs. 13 million.

The present charter rates are USD 5,350 per day for both vessels 'Mercs Uva"and "Mercs Uhana".

The indications are that there will be a marginal increase in charter rates in the near future and it is hoped that the rates will continue on an upward trend in time to come, said A. N. U. Jayawardena, Chairman Mercantile Shipping Company PLC in their 34th Annual General Meeting of the Company.

"With charter rates continuing to be unstable in this uncertain economic environment the position of the Company has deteriorated further."However the German Bank has continued to cooperate with the Company in dealing with the servicing of the loan and the Company continued to pay only the interest and a 25% component of the capital of the loan installment. However in view of the negative net asset position resulting from the continuing losses, and in keeping with the Sri Lanka Financial Reporting Standards the Board has made a provision for the write-off of the Investment by the Company in Mercantile Emerald Shipping (Pvt)Ltd.

The Company continues to receive a stable flow of income from both its investment buildings and enjoys rent free space for its office.The Company investment in the joint venture with Hemas Transportation (Pvt) Ltd has been completely eroded due

to continuing losses and the Company is in the process of liquidation.

Meanwhile the Company has, in the present circumstances of the continued worldwide economic recession, taken the following measures to mitigate the problems faced by it.

"Close negotiations are in progress with the German Lending Bank to arrive at an acceptable solution with regard to the facility obtained." "In addition continued control of operational costs is being implemented and administrative costs have been reduced to the bare minimum. It is anticipated that with these stringent cost controls, the Company will be able to continue to pay interest plus 25% of the Capital tranche throughout the current financial year, unless any unexpected eventuality occurs."

"Continued to keep the vessels on charter despite there being no positive change in the charter rates."
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Richard Pieris Group records Rs.10 b revenue in Q1

The Richard Pieris Group ended its first quarter on a strong note reporting a Group Revenue of Rs.10.3 billion and a Profit Before Tax of Rs.771 m.

The reported Revenue and PBT signifies a growth of 17% and 22% respectively over and above the previous year. The three months ended 30th June 2015 resulted in a very robust performance in all sectors of the Group except the plantations sector which was hampered by a drop in prices of all commodities including tea, rubber and palm oil due to external factors.

The reported profits represent business profits, and do not include any gains of a capital nature.

The Retail Sector of the Group comprises of Arpico Super centres and the network of Arpico outlets scattered island wide.

"The first quarter of the financial year 2015/ 16 started off vibrantly for the retail sector with the "Avurudu siritha campaign" which resulted in a lot of hype leading up to the Sinhala and Tamil New Year.

The focus on Marketing activities continued throughout the quarter along with the popular "Top tips campaign".

The sector also began commercial operations in two Arpico Daily outlets in Hanwella and Attidiya during the quarter under review.

The Plastics and Distribution Sector continued its success of 2014/15 and reported a growth of 90% in its reported Operating Profit for the quarter under review over and above the 1st quarter results of the previous year.The Plantation Sector of the Group experienced a very challenging first quarter facing many adverse factors.
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