Fitch Ratings has affirmed Sri Lanka-based Sierra Cables PLC’s National Long-Term Rating at ‘A+(lka)’. The Outlook is Stable.
The affirmation and Stable Outlook reflect Fitch Ratings’ view that Sierra will be able to maintain adequate financial metrics in the next 12 months despite the expected contraction in Sri Lanka’s economy and weaker demand for construction and infrastructure projects.
Sierra’s increased focus on export markets and weakened competition from imports amid the import restrictions will help the company to mitigate the headwinds. Sierra’s rating reflects its small operating scale and exposure to cyclical end markets and commodity price risk, which are partly offset by its prominent position in the domestic cable industry.
Sierra has limited liquidity headroom, and depends on lenders’ appetite to roll over working-capital facilities, although the company’s working-capital cycle has remained adequate in the last 12 months.