Sri Lanka stocks snap 4-day falls; foreign buying in Keells boosts

(Reuters) - Sri Lankan stocks snapped a four-day losing streak on Tuesday, recovering from a more than one-week closing low hit on Monday, led by foreign buying in market heavyweight John Keells Holdings Plc.

The market would move sideways in the short term with lower risk due to lower interest rates, said analysts.

The main stock index rose 0.18 percent, or 11.52 points, to close at 6,310.87, edging up from its lowest close since June 11 hit on Monday. It hit a more than one-year high on June 17.

Market heavyweight John Keells Holdings, which ended 0.8 percent firmer, accounted for 35.8 percent of the day's turnover. The biggest listed lender Commercial Bank of Ceylon Plc rose 1.20 percent.

The bourse saw a net foreign inflow of 331.2 million rupees ($2.54 million) worth of stocks on Tuesday, mainly in Keells, ending two days of outflows. The net foreign inflows so far this year have reached 5.83 billion rupees.

Turnover was 874.9 million rupees, less than this year's daily average of 999.7 million rupees.

Analysts said investors are awaiting to see the impact of the recent ethnic violence and possible implications after a government spokesman said Sri Lanka bought Iran crude via third parties.

Stockbrokers said investors perceive the violence in the previous weekend that killed at least three people and left over 75 people seriously injured could hit the market and the tourism sector.

Sri Lanka's government spokesman said on Thursday the island nation has been buying Iranian crude from various countries via third parties, and avoiding Western sanctions with the understanding of the United States. The United States denied the claim.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. It has been on a falling trend since Wednesday after the central bank held the key policy rates steady, though some had expected a rate cut. 

($1 = 130.2000 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lanka shares close up 0.2-pct

June 24, 2014 (LBO) - Sri Lanka's shares closed 0.18 percent higher with index heavy John Keells Holdings gaining amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 11.52 points higher at 6,310.87, up 0.18 percent. The S&P SL20 closed 21.19 points higher at 3,496.12, up 0.61 percent.

Turnover was 874.88 million rupees, up from 867.34 million rupees a day earlier with 91 stocks closed positive against 75 negative.

John Keells Holdings closed 1.80 rupees higher at 221.80 rupees with two off-market transactions of 211.25 million rupees changing hands at 221.00 rupees per share contributing 24 percent of the turnover.

JKH’s W0022 warrants closed 1.20 rupees higher at 60.00 rupees and its W0023 warrants closed 90 cents higher at 71.00 rupees.

The aggregate value of all off-the-floor deals represented 43 percent of the daily turnover.

PCH Holdings closed 40 cents higher at 1.40 rupees and PC Pharma closed 40 cents higher at 1.80 rupees, attracting most number of trades during the day.

Foreign investors bought 416.96 million rupees worth shares while selling 85.74 million rupees worth shares.

Commercial Bank closed 1.60 rupees higher at 135.00 rupees and National Development Bank closed 4.90 rupees higher at 199.90 rupees.

Ceylon Tobacco Company closed 4.90 rupees higher at 999.90 rupees and Nestle Lanka closed 4.00 rupees higher at 1,941.00 rupees.

Dialog Axiata closed 10 cents higher at 10.50 rupees and Sri Lanka Telecom closed 40 cents lower at 47.50 rupees.

Ceylon Beverage Holdings closed 38.10 rupees lower at 510.00 rupees and Lion Brewery Ceylon closed 4.30 rupees lower at 450.00 rupees.

Sri Lanka's NDB ups IFC-backed funding to US$200mn

June 24, 2014 (LBO) - Sri Lanka's National Bank Plc raised 75 million US dollars with backed by the International Finance Corporation adding to 125 million dollars raised in March, officials said.

The proceeds will be used to finance up to 50,000 micro and small scale enterprises.

The IFC itself gave 20 million US dollars and it syndicated a 105 million US dollar loan with six international banks from several development lenders.

Another 75 million US dollars have been raised from Germany's DEG, Oesterrieichische Entwicklungsbanks (OeEB) of Austria, OPEC Fund for International Development, FMO of Netherlands and the Swiss Investment Fund for Emerging Markets (SIFEM).

"The long tenor of the syndication enables us to pas on this benefit to our clients," NDB Chief Executive Officer Rajendra Theagarajah said.

He said the funding will go to leisure, value added exports, construction, logistics and knowledge services and matching the 'five hubs' growth strategy of the country.

NDB will give loans up to 8 years, with a 'suitable grace period' at 'meaningful and affordable' rates, he said.

The bank already has a 'pipeline' of foreign currency denominated loans and the Central Bank also gave a partial foreign currency hedge, Theagarajah said.

IFC's Ehsanul Azim said it is the largest single finance done for Sri Lanka.

He said it showed the confidence of investors in Sri Lanka and the governance and business model of NDB.

Development lenders from Austria, Switzerland were coming for the first time to Sri Lanka, Theagarajah said.

Their exposure to the country will open the road to other firms also to tap them, he said.

Rs 5B DFCC debt issue rated 'AA-'

Fitch yesterday (23) assigned DFCC Bank's proposed Rs 5 billion debt issue an expected rating of 'AA-'.

Fitch also affirmed DFCC Bank's (DFCC) Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDRs) at 'B+' with a Stable Outlook. The agency has also affirmed DFCC's Viability Rating (VR) at 'b+'. DFCC's National Long-Term Rating has also been affirmed at 'AA-(lka)' with a Stable Outlook.


Fitch has also affirmed its 99.1% subsidiary, DFCC Vardhana Bank PLC's (DVB) National Long-Term Rating at 'AA-(lka)' with a Stable Outlook. A full list of rating actions is at the end of this commentary.

"DFCC's IDRs, VR and National Rating reflect its intrinsic risk profile, driven by its strong profitability and capitalization, counterbalanced by the group's expanding commercial banking business conducted through its 99% subsidiary, DVB," Fitch said in a statement.

"Fitch considers DVB to be a core subsidiary of DFCC, and as such the credit profiles of the banks cannot be meaningfully disentangled. Therefore, the agency has equalized the ratings of DFCC and DVB. This approach is outlined in greater detail in Fitch's published criteria for 'Rating FI Subsidiaries and Holding Companies'.

"DFCC's USD notes are rated at the same level as DFCC's Long-Term Foreign-Currency IDR as they constitute unsecured and unsubordinated obligations of the issuer. Fitch has assigned a Recovery Rating of 'RR4' to the notes to reflect average recovery prospects of 31%-50% for holders of this debt, in case of default under both a standalone and consolidated basis.

"DFCC's proposed and outstanding LKR denominated senior debt is rated at the same level as DFCC's National Long-Term Rating as they constitute direct, unconditional, unsecured and unsubordinated obligations of the issuer. The proposed debentures are expected to have a tenor of three years with a bullet principal payment at maturity. The final rating is contingent upon the receipt of final documentation conforming to information already received.

"DFCC's and DVB's subordinated debt is rated one notch lower than the respective issuer ratings to reflect its gone-concern loss-absorption qualities in the event of liquidation, in line with Fitch's criteria for rating such securities.

"DFCC is engaged in merger discussions with National Development Bank (B+/Stable). This is as a part of the Government of Sri Lanka's "Master Plan" to consolidate the financial system, which includes establishment of one large development bank to provide impetus to policy-driven development banking activities in the country. Fitch believes that the merged bank will primarily focus on supporting economic development. Fitch is of the view that synergies from such an amalgamation could be beneficial to the credit profile of the merged entity in the long run although credit neutral in the short to medium term. Fitch will further comment on the matter once details and the time frame of this deal become clearer.

"DFCC's loan book grew faster than the banking sector and recorded an increase of 15.4% in the financial year ended March 2014 (FYE14). More than 75% of this growth stemmed from DVB and as a result, DVB's loan book accounted for about 45% of the group's loans at end-Mar 2014 (end-Mar 2013: 40.9%). Although DFCC's asset quality has historically remained weaker than its peers, the bank has been able to control the slippage of asset quality better than most peers in a challenging operating environment. DFCC's provision coverage remained comparable with its rating peers.

"Capitalisation declined over the year, but it remained strongest among the peers both in terms of Fitch Core Capital (FCC) ratio and Tier 1 Capital Adequacy Ratio (CAR) and stood at 28.4% and 18.8% respectively at FYE14, while the deviation among the two ratios is mostly attributed to the significant unrealised gains in DFCC's equity investments.

"The upgrade of DFCC's IDRs, VR and National Rating would be contingent on DFCC consolidating its commercial banking franchise alongside its ability to sustain strong credit metrics. The IDRs, VR and National Rating could be downgraded if there is a sustained and substantial increase in risk appetite that could materially weaken its strong capital position.

"Because Fitch views DVB as carrying the same risk as DFCC, DVB's ratings will move in tandem with DFCC's ratings. DVB's ratings are also sensitive to changes in its strategic importance to DFCC.

"As the rating of the notes is linked to DFCC's IDR, any changes to that rating would impact the issue's rating.

"The rating of DFCC's LKR-denominated senior debt will move in tandem with its National Long-Term Rating.

"Any change in the issuer ratings would impact the ratings of subordinated debt issued by DFCC and DVB," Fitch said.
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Now, 8 delist

By Mario Andree

NDB Capital Holdings, a subsidiary of National Development Bank, has announced its intention to delist from the Colombo Stock Exchange following seven other listed corporates who previously filed delisting due to the intervention by the Securities and Exchange Commission in introducing the minimum public float.

National Development Bank, the majority shareholder of the company has made arrangements to buy back shares, last traded at Rs 496.40, from minority shareholders at Rs 600 per share.

NDB Capital Holdings for the first three months ended 31 March this year reported a profit of Rs 181,605, down 39% from Rs 296,783 a year earlier. The total comprehensive income of the company declined 38% to Rs 182,605 from Rs 296,783. Earnings per share dropped 25% to Rs 5.52 from Rs 7.38.

The de-listing of NDB Capital Holdings is the fifth announcement, totalling the number of de-listings to eight.

Two companies so far have received necessary shareholder and regulatory approvals for the purpose.

Kuruwita Textiles, Beruwala Walk Inn, Asiri Central Hospital, Shalimar (Malay) PLC, Selinsing PLC, Good Hope PLC and Indo-Malay PLC announced de-listing earlier this year.

Majority of shareholders of Kuruwita Textiles and Asiri Central Hospital had agreed to de-list from the Colombo Stock Exchange and approved the offer price by each individual holding company.

Ceylon FT on 20 January 2014 reported that many corporates queried how to de-list from the stock exchange when the securities market's watchdog introduced the minimum public float requirement to be listed.
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