Thailand's Group Lease buys 30-pct stake in Sri Lanka's Commercial Credit in Rs10bn deal

ECONOMYNEXT – Thailand's Group Lease Holdings bought a 30% stake in Sri Lanka's Commercial Credit and Finance at Rs111 a share in a Rs10.6 billion deal, a stock exchange filing said.

Stock brokers Asia Securities said its client Group Lease Holdings bought 95,390.500 shares of Commercial Credit and Finance, a 29.99% stake.

Commercial Credit and Finance closed at Rs60.60 Thursday after trading in the Rs60.30-67 range.

The deal was the largest transaction on the Colombo bourse since March 2012.

Asia Securities handled the entire buy side and almost 80% of the sell side of the deal, giving it a leading market share for foreign trading, sources said.

Colombo Stock Exchange Market Review – 08th Dec 2016

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Colombo Stock Exchange Trade Summary 08-Dec-2016

Colombo bourse edged higher on Thursday backed by high investor interest in selected blue-chips. However, the highlight of the day was the strategic transaction in Commercial Credit, which saw a 95.4mn shares changing hands at LKR 111.00. Not only had the transaction pushed the turnover to near 5-year high, it turned the year-to-date net foreign outflow to a net inflow of LKR 997mn.

As notified earlier, the transaction was executed in accordance with the share purchase agreement between BG Investments, Creations Investments, Mr.S.L. La France (Sellers) and Group Lease Holdings (Buyer). However with the conclusion of the transaction, the share price of Commercial Credit plummeted in the normal board to LKR 60.60, -5.9%.

The benchmark ASI inclined 10.52 index points (+0.2%) to 6,337.82 while blue-chip S&P SL 20 index gained 22.07 index points (+0.6%) to 3,555.91. The index was driven up by the late-hour gains in John Keells Holdings (LKR 155.00+2.6%) along with Hemas Holdings (LKR 98.00,+2.1%) and John Keells Hotels (LKR 11.20,+4.7%). Shares of Sri Lanka Telecom (LKR 35.00,-2.8%), Commercial Credit and Carsons Cumberbatch (LKR 178.00,-3.0%) lead the losers. Market breadth was positive with gainers offsetting losers 69 to 59.

Market turnover touched near 5-year high of LKR 12.0bn. 88% of the turnover came from Commercial Credit (LKR 10.6bn) while the balance LKR 1.4bn was supported by the activities in Dialog Axiata (LKR 540mn), John Keells Holdings (LKR 533mn) and Hemas Holdings (LKR 70mn). Crossings in Commercial Credit, John Keells Holdings (2.1mn shares at LKR 152-155.00) and Hemas Holdings (0.4mn shares at LKR 98.00) contributed 91% of the turnover.

John Keells Holdings and Commercial Credit dominated the market activity today and accounted for 30% of the trades. However, Renuka Agri Foods (LKR 3.20,+6.7%), Ceylon Cold Stores (LKR 780.20,+0.5%) and Access Engineering (LKR 25.20,+0.8%) managed to attract some investor interest in today’s session.

Foreign activity shot up to 85% of the market turnover as a result of the transactions in Commercial Credit. Accordingly, net foreign inflow in today’s session stood at LKR 2.9bn, with notable net inflows in Commercial Credit (LKR 2.5bn), John Keells Holdings (LKR 422mn) and Lion Brewery (LKR 18mn) while top net outflow was seen in Hemas Holdings (LKR 15mn).
Source: LSL

Sri Lanka shares gain on foreign buying; Thai Group's deal lifts mood

Reuters: Sri Lankan shares rose on Thursday as a stake buy in Commercial Credit and Finance Plc by a unit of Thailand's Group Lease Plc lifted the mood while foreign investors bought domestic stocks and turned net buyers so far in the year.

Group Lease Holdings Pte Ltd, a subsidiary of Thailand's Group Lease Plc purchased 95.4 million shares or 29.99 percent in Commercial Credit And Finance Plc, Asia Securities, which was directly involved in the deal, said in a disclosure to the bourse.

The transaction was valued at 10.59 billion rupees ($71.31 million), according to a statement by Group Lease Holdings Pte Ltd.

Foreign investors bought a net 11.7 billion rupees ($78.79 million) worth of shares on Thursday, reversing the year-to-date net foreign outflow to 996.68 million rupees worth of net investment in shares.

Turnover was 12 billion rupees, its highest since March 16, 2012, compared with this year's daily average of 748.9 million rupees.

Shares of Commercial Credit and Fiance Plc, however, ended 5.90 percent weaker.

The Colombo stock index ended 0.17 percent at 6,337.82, edging up from its lowest close since Dec.2 hit on Wednesday. The bourse gained 1.17 percent last week, recording its first weekly gain in four weeks.

"It was a fairly dry year, but today's trade will give a bit of confidence to the investors," said Kanishka Perera Head of Research at Asia Securities.

"There could be a slight boost to the turnover levels in the coming days and this shows that still there is investor confidence in the market."

The deal, according to brokers, is a positive as it assures investors of continuing foreign appetite towards Sri Lanka at a time of worries over the proposed increases in various taxes and fees affecting growth.

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees year-on-year to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

Shares of conglomerate John Keells Holdings Plc rose 2.58 percent while Hemas Holdings Plc rose 2.08 percent. 

($1 = 148.5000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Vyas Mohan)

Fitch rates Bank of Ceylon subordinated debt final AA(lka)

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

The final rating is the same as the expected rating assigned on 25 October 2016, and follows the receipt of documents conforming to information already received.

The proposed issuance, which will have tenors of five and eight years and carry fixed and floating coupons, are to be listed on the Colombo Stock Exchange. BOC expects to use the proceeds to expand the loan book, improve its Tier II capital base and reduce asset and liability maturity mismatches.

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 obligations.

The National Long-Term Rating of BOC reflects Fitch’s expectation of extraordinary support from the sovereign.

Fitch expects support for BOC to stem from its high systemic importance, quasi-sovereign status, role as a key lender to the government and full state ownership.

RATING SENSITIVITIES

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

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

BOC’s ratings are follows:

Long-Term Foreign-Currency IDR: ‘B+’; Outlook Negative
Short-Term Foreign-Currency IDR: ‘B’
Long-Term Local-Currency IDR: ‘B+’; Outlook Negative
National Long-Term Rating: ‘AA+(lka)’; Outlook Stable
Viability Rating: ‘b+’
Support Rating: ‘4’
Support Rating Floor: ‘B+’
US dollar senior unsecured notes: ‘B+’; Recovery Rating at ‘RR4’
Basel II compliant outstanding subordinated debentures: ‘AA(lka)’
Proposed Basel II compliant subordinated debentures: ‘AA(lka)’

Sri Lanka's Treasuries yields steady at auction

ECONOMYNEXT - Sri Lanka's Treasuries yield were mainly steady at Wednesday's auction with the 06-month bill yield up one basis point to 9.56%, the debt office said.

The 03-month bill yield remained at 8.60% and that of the 12-motnh bill stayed at 10.10%, a statement said.

The debt office said it got bids worth Rs61 billion and accepted bids worth Rs18 billion.

Colombo Stock Exchange Market Review – 07th Dec 2016

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Colombo Stock Exchange Trade Summary 07-Dec-2016

Colombo Bourse extended losses for the second straight session amid profit taking after the quick 136 points surge seen in the past few days. ASI lost 23.10 index points (or 0.4%) to close at 6,327.30 while blue-chip S&P SL 20 index lost 6.21 index points (or 0.18%) to close at 3,533.84.

Sri Lanka Telecom (closed at LKR 36.00, -1.9%), Commercial Credit & Finance (closed at LKR 64.40, -4.0%) and Ceylon Cold Stores (closed at LKR 776.00, -1.1%) led the losers among the blue-chips whilst shares of Hatton National Bank (closed at LKR 225.50, +1.1%) and Central Finance (closed at LKR 100.00, +0.9%) gained ground. However, reflecting the overall bearish sentiments, the losers outweighed gainers 90 to 28 while 69 stocks remained unchanged.

Market turnover was LKR 830mn. Crossings in Nestle Lanka (0.05mn shares at LKR 2,050.00), Aitken Spence (1.4mn shares at LKR 65.00) and Lion Brewery (0.15mn shares at LKR 490.00) contributed 32% of the turnover. Accordingly, Aitken Spence (LKR 212mn), Nestle Lanka (LKR 111mn) and Lion Brewery (LKR 73mn) made highest contributions to the turnover along with Dialog Axiata (LKR 190mn).

Commercial Credit was the most actively traded share by far as the progress announcement of the share purchase agreement spurred interest among the retail investors. However, after the several days of bullish sentiments, the share witnessed some profit taking and closed at LKR 64.40 down by 4.0%. Further, relatively high level of activity were seen in John Keells Holdings (LKR 151.10,-0.3%), Aitken Spence (LKR 65.00) and Access Engineering (LKR 25.00).

Foreign investors continued to be active participants and accounted for 59% of the market activity. At the end of the session, foreign investors were net sellers with a net foreign outflow of LKR 106mn. Top net outflows were seen in Aitken Spence (LKR 189mn), Central Finance (LKR 9mn) and Nestle Lanka (LKR 8mn) while top net inflow was seen in Lion Brewery (LKR 73mn).

At the weekly T-Bill Auction, the rates remained steady in 3-month (8.6%) and 1-year durations (10.10%) while yield in 6-month T-bill edged higher by one bps to 9.56%. CBSL offered LKR 25bn worth of T-bills and the auction was oversubscribed by 2.4 times. However, CBSL accepted only LKR 18bn.
Source: LSL

Sri Lanka shares end near one-week closing low

Reuters: Sri Lankan shares ended weaker for a second straight session on Wednesday, to hit their lowest close in nearly one week, with foreign investors selling domestic shares as uncertainty over budget proposals continued to keep sentiment subdued.

The Colombo stock index ended down 0.36 percent at 6,327.30, moving away from its highest close since Nov. 15 hit on Monday. The bourse gained 1.17 percent last week, recording its first weekly gain in four weeks.

Foreign investors sold a net 105.6 million rupees ($711,590.30) worth of shares on Wednesday extending the year-to-date net foreign outflow to 1.9 billion rupees worth of shares.

Turnover was 830.1 million rupees, compared with this year's daily average of 699.03 million rupees.

Despite recent gains, investors are concerned that proposed increases in various taxes and fees would reduce disposable income and challenge consumption-led growth.

"Market is moving sideways as there is no clear direction and not much of retail (investor) participation," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"The positive sentiment was short-lived and uncertainty over budget proposals and lack of positive sentiments very bad for investor climate."

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees year-on-year to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

Brokers said investors were concerned about the sustainability of rates after the central bank on Tuesday kept key rates unchanged.

Shares of Colombo Cold Stores Plc fell 1.12 percent while the biggest-listed lender Commercial Bank of Ceylon Plc ended steady.

($1 = 148.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Sherry Jacob-Phillips)