Fitch rates Asia Asset Finance Debentures at ‘A+(lka)’

Fitch Ratings has assigned Asia Asset Finance PLC (AAF, A+(lka)/Stable) outstanding Sri Lanka rupee-denominated secured (asset backed) debentures a National Long-Term Rating at ‘A+(lka)’. The debentures will mature in 2026 and have a total outstanding face value of LKR565.25 million as of 15 October 2024. They are listed on the Colombo Stock Exchange.

The secured debentures are rated at the same level as AAF’s National Long-Term Rating in accordance with Fitch’s criteria. This is because the secured debenture holder’s rank is higher in priority to all other unsecured creditors and any preference and ordinary shareholders of the company.

AAF’s National Long-Term Rating reflects Fitch’s expectation that its India-based parent, Muthoot Finance Ltd (MFL, BB/Stable), would provide extraordinary support to the Sri Lankan subsidiary, if needed. AAF’s stand alone credit profile does not drive its National Long-Term Rating, and is assessed to be materially weaker than its support-driven rating.

Insurance penetration in the country continued to remain at a lower level during the first half (H1) of 2024.

The sector comprises 29 companies at the end Q2 of 2024, of which 15 operated as exclusive long term insurance companies and 13 as exclusive general insurance companies, while one company had both long term and general insurance businesses.

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