Sri Lankan shares down for second day; Lanka IOC drags

May 27 Sri Lankan shares fell for a second session on Wednesday led by Lanka IOC after its poor performance in the March quarter, and also on foreign outflows, stockbrokers said.

However, most investors have been cautiously optimistic on the island nation's risky assets due to a lack of clarity on the political front and the timing of a parliamentary election as concerns over stability weighed on sentiment.

The main stock index ended down 0.11 percent at 7,253.50, the lowest close since May 14.

"The index will be moving zig-zag until you see some kind of positive news on political stability," a stockbroker said.

Political uncertainty due to the Ranil Wickremesinghe-led government not having a majority has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

The index has gained 5.2 percent since the rate cut.

Analysts say a new stable government after the election coupled with strong economic measures would boost confidence.

Foreign investors sold a net 482.3 million rupees ($3.60 million) worth of shares on Wednesday. But the bourse has seen net foreign inflows of 5.09 billion rupees in equities so far this year.

Turnover was 1.49 billion rupees, more than this year's daily average of about 1.13 billion rupees.

Lanka IOC, which last week posted a 1.06 billion rupee loss in the March quarter compared to a profit of 722.8 million rupees in the same period last year, fell 5.97 percent to 29.90 rupees, its lowest close since Nov. 28, 2013.

Stockbrokers said they had been expecting a better performance from Lanka IOC during the March quarter.

Analysts expect banking and financial shares to gain due to rising private sector credit growth, which grew 13.9 percent on-year in March from 12.6 percent in February. 

($1 = 133.9000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Fitch rates Singer Finance's senior debt final 'BBB(lka)'

Fitch Ratings has today assigned Sri Lanka-based Singer Finance (Lanka) PLC's (SFL; BBB(lka)/Stable) senior secured debt a final National Long-Term Rating of 'BBB(lka)'. The final rating is at the same level as the expected rating assigned on 18 February 2015.

On 21 May 2015, SFL signed the trust deed to issue up to Rs1.5billion of senior secured debentures. The proposed issuance will have a maturity of five......years with bullet principal repayment at maturity. Coupon payments will be at a fixed rate, and paid annually.

SFL expects to use the proceeds to fund lending growth, lengthen maturities of its liabilities, and reduce structural maturity mismatches. The debentures are to be listed on the Colombo Stock Exchange.

KEY RATING DRIVERS
NATIONAL RATINGS AND SENIOR DEBT
The issue has been rated at the same level as SFL's National Long-Term Rating. Fitch has not provided any rating uplift for the colateralization as the secured notes' recovery prospects are considered to be average and comparable with those of unsecured notes in a developing legal system.

SLFL's rating reflects Fitch's view that support would be available from its parent, Singer (Sri Lanka) PLC (Singer; A-(lka)/Stable), if needed. This view is based on Singer's majority shareholding and board representation on SFL, the common Singer brand and a track record of support from Singer through equity injections and funding lines.

SFL's National Long-Term Rating is underpinned by its standalone credit profile, which reflects better capitalisation levels, modest profitability and satisfactory asset-quality when compared with similarly rated domestic peers.

RATING SENSITIVITIES
NATIONAL RATINGS AND SENIOR DEBT
Any changes to Singer Finance (Lanka) PLC's (SFL) National Long-Term Rating would impact the issue's rating. As such, the issue rating is sensitive to changes to Fitch's view on Singer (Sri Lanka) PLC's (Singer) ability and propensity to provide support to SFL. A weakening in SFL's intrinsic strength would only trigger a downgrade of its National Long-Term Rating if Fitch's support assessment were to change at the same time.

Fitch believes that an upgrade for SFL would most likely result from a significant increase in SFL's strategic importance to Singer. Positive rating action could also result if SFL develops its franchise, while maintaining its financial profile relative to higher-rated peers. 

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Arpico Insurance renamed

Arpico Insurance Company has been renamed as Arpico Insurance subsequent to the entity being listed on the Dirisavi Board in the Colombo Stock Exchange. This is with effect from January 16, 2015.

The company annual general meeting will be held on June 26, at their Navinna office.
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Textured Jersey to buy Quenby for US$ 3.5 m

Textured Jersey Lanka has decided to proceed with the acquisition of Quenby Lanka Prints for US$ 3.5 million.

The entire consideration is due to be paid out in cash to the shareholders of Quenby Lanka in order to acquire the shares of the company.

Quenby Lanka, a 50%-50% joint venture between Brandix Lanka Limited and Trust Family industries, , is a leading Fabric Printer based in Sri Lanka. Quenby Lanka is registered with the Board of investments of Sri Lanka and its facility is located on 4.4 acres of land in the Seethawaka International Industrial Park, in close proximity to TJL.

"In addition to the printing capability enhancement for TIL, the acquisition also offers potential for further capacity optimization and margin improvement through synergies. As a strategically located vendor, over the years Quenby Lanka has developed a strong working relationship with TJL," an official from Textured Jersey said.
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