Sri Lankan shares recover from 4-1/2-month low on foreign buying

Reuters: Sri Lankan shares on Thursday edged up from their lowest close in more than four months hit in the previous session, as foreign investors bought battered shares.

The Colombo stock index ended 0.02 percent higher at 6,362.18, recovering from its lowest close since April 17 hit on Wednesday.

The bourse ended 0.3 percent lower last week, its seventh straight weekly fall. As of Wednesday’s close, it shed more than 4.6 percent since July 27.

Shares of Lanka ORIX Leasing Company Plc ended 6.7 percent higher, while Ceylon Cold Stores Plc closed up 1.0 percent and Melstacorp Ltd ended 0.9 percent firmer.

Foreign investors net bought 332.1 million Sri Lankan rupees ($2.18 million) worth of shares, extending the year-to-date net foreign inflow to 27.7 billion rupees worth equities.

“Market is up with some foreign buying,” said Dimantha Mathew, head of research, First Capital Holdings.

“The market is slow as investors are waiting to see the direction.”

Mathew said investors are waiting to see the clarity on taxes following the Inland Revenue Bill and also waiting to see the outcome of the U.S Fed rate announcement.

The bill, Sri Lanka’s major tax reform since independence from Britain in 1948, seeks to expand the tax net and stamp out evasion. It is expected to be presented in the parliament on Sept. 7.

Turnover stood at 627.6 million rupees, less than this year’s daily average of around 860.9 million rupees.

($1 = 152.4000 Sri Lankan rupees)

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

Sri Lanka’s PABC’s Outstanding Debentures gets ‘BB+(lka)’ rating: Fitch

Fitch Ratings-Colombo-04 September 2017: Fitch Ratings has assigned Pan Asia Banking Corporation PLC’s (PABC, BBB-(lka)/Stable) outstanding Sri Lanka rupee-denominated Basel II compliant subordinated debentures a National Long-Term Rating at ‘BB+(lka)’.

The debentures mature in 2019 and amount to LKR3 billion.

A full list of PABC’s ratings is given below.

KEY RATING DRIVERS

The outstanding subordinated debentures are rated one notch below PABC’s National Long-Term Rating to reflect their subordination to senior unsecured creditors.

PABC’s National Long-Term Rating of ‘BBB-(lka)’ reflects declining capitalisation following its rapid growth in the past. The bank raised LKR2.1 billion in March 2017 via a rights issue to increase its minimum regulatory capital in order to meet the LKR7.5 billion target which was due on 1 January 2017.

PABC is required to increase this further to LKR10 billion by 1 January 2018. Fitch believes that the bank’s earnings retention alone is not likely to be sufficient to achieve the capital standards, despite improved profitability.

RATING SENSITIVITIES

The rating on the outstanding debentures will move in tandem with PABC’s National Long-Term Rating.

An upgrade of PABC’s rating is contingent upon the bank achieving a sustained and significant improvement in capitalisation, alongside a moderation in risk appetite. PABC’s rating would be downgraded if loss-absorption buffers deteriorate further, either through aggressive loan-book growth or a greater share of unprovided NPLs.

A full list of PABC’s ratings are as follows:

National Long-Term Rating: ‘BBB-(lka)’; Outlook Stable
Sri Lanka rupee-denominated senior unsecured debentures: ‘BBB-(lka)’

The following outstanding Basel II-compliant subordinated debentures are rated ‘BB+(lka)’:
– LKR1.91 billion 9.75% listed subordinated debentures due 2019
– LKR1.09 billion 9.523% listed subordinated debentures due 2019

Sri Lanka Treasuries yields fall

ECONOMYNEXT – Yields on Sri Lankan Treasury Bills fell at an auction Wednesday with the one-year bill yield down 09 basis points to 9.58 percent from 9.67 percent last week, the public debt department of the Central Bank said.

The yield on the 06-month bill fell 07 basis points to 9.23 percent from 9.30 percent last week, it said in a statement.

The 03-month bill was not offered. The department got bids worth Rs63.9 billion and accepted bids worth Rs18 billion.

Sri Lankan shares hit 4-1/2-month closing low

Reuters: Sri Lankan shares closed at their lowest in more than four months on Wednesday, with foreign investors selling risky assets in lacklustre trade, while the daily turnover got a boost from block trades.

The Colombo stock index resumed trade after a holiday, ended down 0.38 percent at 6,361.03, its lowest close since April 17.

The country’s stock and foreign exchange markets were closed on Friday and Tuesday for religious holidays.

The bourse ended 0.3 percent lower last week, its seventh straight weekly fall. As of Wednesday’s close, it has shed more than 4.6 percent since July 27.

Shares of Sri Lanka Telecom Plc ended 3.3 percent down, while Trans Asia Hotel Plc closed 9.4 percent lower and the biggest-listed lender Commercial Bank of Ceylon Plc ended 0.4 percent weaker.

Foreign investors net sold 263.8 million Sri Lankan rupees ($1.73 million) worth of shares, but they have net bought 27.4 billion rupees worth equities so far this year.

“Another slow day. Investors are looking for direction and staying away,” said Dimantha Mathew, head of research, First Capital Holdings.

Mathew said investors are waiting to see the clarity on taxes following the Inland Revenue Bill.

The bill, Sri Lanka’s major tax reform since independence from Britain in 1948, seeks to expand the tax net and stamp out evasion. It is expected to be presented in the parliament on Sept. 7.

Turnover stood at 1.5 billion Sri Lankan rupees ($9.83 million), well above this year’s daily average of around 862.4 million rupees.

($1 = 152.6000 Sri Lankan rupees)

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