Fitch Ratings has affirmed People’s Leasing & Finance PLC’s (PLC) National Long-Term Rating at ‘A-(lka)’ and removed it from Rating Watch Negative (RWN). The Outlook is Stable.
“The removal of the RWN reflects our view that downside to the rating is less imminent following the completion of the local-currency portion of the sovereign’s domestic debt optimisation (DDO), which addresses one element of risk to sector funding and liquidity,” Fitch said.
“The operating environment will remain weak in light of strained household finances and fragile investor confidence, but should stabilise on gradual economic recovery with easing inflation and interest rates. Reduced economic risk will temper the pressure on finance and leasing companies’ (FLCs) operating performance and liquidity profile, although the pace of recovery may vary with individual entities’ business mix and franchise strengths.”
Fitch expects sector growth to remain weak with lingering asset quality pressure in the financial year ending March 2024 (FY24), but this may improve in FY25 as the economy recovers. “Declining interest rates should ease funding cost pressure, but could hit asset yields for lenders with shorter asset-repricing cycles.”
“We view PLC’s financial flexibility as stronger than that of peers as its unsecured debt accounted for 93% of total debt as of FYE23, one of the highest in the peer group.”
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