Fitch assigns Asia Asset Finance’s proposed subordinated debt ‘A-(EXP)(lka)’

EconomyNext reports that Fitch Ratings assigned an expected National Long-Term Rating of ‘A-(EXP)(lka)’ to Asia Asset Finance PLC’s proposed Sri Lankan rupee-denominated subordinated listed debentures, with an issue size of up to Rs.3 billion. Daily Mirror also reports the expected rating and maximum issue size. EconomyNext dates Fitch’s announcement to 26 October 2026.

EconomyNext reports that the debentures are likely to mature in five years and be listed on the Colombo Stock Exchange. The company intends to use the proceeds to strengthen its Tier 2 capital and support expansion of its loan book. EconomyNext says the final rating remains subject to receiving final documents that match information Fitch has already reviewed.

EconomyNext reports that Fitch rated the proposed debt two notches below Asia Asset Finance’s ‘A+(lka)’ National Long-Term Rating. Fitch said the expected rating reflects its assessment of potential loss severity and poor recoveries if the issuer defaults, with no extra adjustment for non-performance risk because the debentures lack going-concern loss-absorption features.

EconomyNext reports that Fitch’s rating for Asia Asset Finance reflects expected extraordinary support from its majority shareholder, India-based Muthoot Finance Ltd, which holds 78.4% of the company. Fitch cited the parent’s past ordinary equity support and strategic and operational alignment in gold-backed lending, while assessing the subsidiary’s importance to the parent as limited because of its size, modest contribution, limited shared branding and separate jurisdiction. Fitch assesses the company’s standalone credit profile as significantly weaker than its support-based rating, according to EconomyNext.