Sri Lankan shares hit over 5-wk closing high on foreign buying

Reuters: Sri Lankan shares gained for a fifth straight session on Wednesday to hit a more than five-week closing high as foreign investors bought into blue-chips, boosting sentiment.

Foreign investors bought a net 556.6 million rupees ($3.64 million) worth of shares, extending the year-to-date net foreign inflow to 17.7 billion rupees.

The Colombo stock index ended up 0.39 percent at 6,452.91, its highest close since Aug. 14.

“We have seen major transactions in blue chips which drive the market these days,” said Dimantha Mathew, head of research at First Capital Holdings.

“Foreigners are active and they are taking positions while the locals are a bit silent. But we can see them also slowly returning to market with high foreign activities.”

Shares of Dialog Axiata Plc rose 4.3 percent, while the biggest listed lender Commercial Bank of Ceylon Plc ended 2.9 percent firmer.

Melstacrop Ltd rose 3.4 percent, while conglomerate John Keells Holdings Plc gained 0.2 percent.

Turnover stood at 1.6 billion rupees, well above this year’s daily average of around 926.2 million rupees. 

($1 = 152.8000 Sri Lankan rupees) 

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

LB Finance’s Senior and Subordinated Debt rated

Fitch Ratings has assigned LB Finance PLC's (LB; A-(lka)/Stable) proposed senior unsecured and subordinated debentures expected National Long-Term Ratings of 'A-(lka)(EXP)' and 'BBB+(lka)(EXP)' respectively.

The issuance is to total LKR3 billion, with the debentures to mature in five years and carry fixed coupons. The debentures are to be listed on the Colombo Stock Exchange. LB expects to use the proceeds to fund loan book growth, reduce asset and liability maturity mismatches and to improve its Tier II capital base.

The final ratings on the debentures are subject to the receipt of final documentation conforming to information already received.

The proposed senior debentures are rated at the same level as LB's National Long-Term Rating as they constitute unsecured and unsubordinated obligations of the company. The proposed subordinated debentures are rated one notch below its National Long-Term Rating to reflect the subordination to its senior unsecured obligations.

The rating of LB captures its established franchise, and satisfactory levels of capital, which are supported by sound profitability through its higher-yielding products.

These are counterbalanced by its relatively higher risk appetite as seen from its exposure to gold-backed lending. The rating also reflects increasing liquidity risk, which could reduce its liquidity buffer.

The ratings on the proposed debentures will move in tandem with LB's National Long-Term Rating.

www.island.lk

Fitch rates Sampath Bank’s Basel III sub debt ‘A (lka) (EXP)’

Fitch Ratings has assigned Sampath Bank PLC’s (A+(lka)/Negative) proposed Basel III compliant subordinated debentures an expected National Long-Term Rating of ‘A(lka)(EXP)’.

The notes, the first Basel III compliant subordinated debt in Sri Lanka, will total Rs 6 billion, mature in five years and carry fixed coupons. The notes include a non-viability clause and will qualify as regulatory Tier II capital for the bank. The bank plans to use the proceeds to support its loan book expansion and to strengthen its Tier II capital base. The debentures are to be listed on the Colombo Stock Exchange.

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

Lankan equities still attractive amid foreign outflow blip

Bloomberg: The biggest single-day outflow in at least 11 years from Sri Lankan stocks is a blip and foreigners, the key drivers of the nation’s equities this year, will likely overlook the negative reading.

Retail Holdings Sri Lanka BV on Wednesday agreed to sell its 61.73% stake in Singer Sri Lanka, a maker of sewing machines, to Hayleys Plc for about $ 71 million. A matching outflow was reported by the exchange on Friday.

“This is a one-off deal that has nothing to do with inflows,” said Sanjeewa Fernando, strategist at CT CLSA Securities in Colombo. “We have to adjust for this outflow.”

Foreigners have been buyers of Sri Lankan stocks for seven straight months through August, the longest streak since May 2015, drawn by the growth in company earnings and renewed confidence in the Government’s policies. The nation’s benchmark equity index trades at 10 times one-year forward earnings, versus a multiple of 15 for the MSCI Frontier Emerging Markets Index.

“Our price-to-earnings is still about the cheapest,” Fernando said. “Until we reach valuation of 14 times, foreigners are likely to transfer some of their funds from pricier markets.”
www.ft.lk