Fitch rates Aitken Spence notes AA(lka)

Fitch Ratings Lanka said it assigned an AA(lka) national senior unsecured rating to Sri Lanka-based Aitken Spence & Co. Ltd.'s LKR 500 million notes. Aitken Spence may upsize the issue up to LKR750 million in the event the issue is oversubscribed. The agency affirmed the AA(lka) national senior unsecured rating on the company's existing LKR 1 billion notes issue.

The outlook is stable.

Proceeds of the notes and a LKR 1 billion long-term loan will be used to refinance the company's LKR 1 billion short-term debt, and the remainder will be used to finance several investments Aitken Spence is making in the near term. Recent investments made through available short-term facilities included raising the company's stake in its largest power generation company to 74% from 50%, financing part of the refurbishments of a number of its resort hotels and the construction of an administrative building.

Fitch said the ratings take into consideration Aitken Spence's diverse business portfolio (both operational and geographic), its strong cash generative earnings and its financial flexibility.

The agency's key rating concern is Aitken Spence's heavy counterparty exposure to the Ceylon Electricity Board, whose financial profile continues to weaken due to electricity subsidies in Sri Lanka.

Adjusted debt to operating EBITDAR is 2.3x.

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