Fitch assigns Abans’ Senior Unsecured Debentures ‘AA-(lka)’ Rating

Fitch Ratings: Fitch Ratings has assigned an ‘AA- (lka)’ National Long-Term Rating to Sri Lanka-based consumer electronics retailer Abans PLC’s (AA-(lka)/Stable) proposed senior unsecured redeemable debentures of LKR1.0 billion, with the option to increase up to LKR2. billion.

The proposed debentures are rated in line with Abans’ existing unsecured notes, as they rank equally. The proceeds from the debentures will be used to refinance the company’s existing debt.

Abans’ rating reflects its strong domestic market share in consumer electronics, supported by an extensive distribution network and established brands, along with its adequate financial profile. Fitch expects a gradual recovery in demand for consumer durables amid a slow rebound in Sri Lanka’s economic activity, which should mitigate profitability pressure from increased competition as imports resume.

“We expect the lifting of the import ban in October 2023 to ease supply shortages and lower Abans’ inventory days. Abans held a large amount of inventory, which peaked at over 200 days in the financial year ended March 2023 (FY23) at the height of the import ban. We do not expect a re-imposition of the ban in the medium term, given Sri Lanka’s improved external finances and the requirement for free trade under the International Monetary Fund (IMF) programme.

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