Fitch Ratings has assigned a positive ‘AA- (lka)’ National Long-Term Rating to the proposed debenture issuance by Sri Lanka’s Abans PLC. Abans, a leading consumer electronics retailer, is offering senior unsecured redeemable debentures valued at LKR 1.0 billion, with the potential to increase the offering to LKR 2.0 billion.
The debentures hold the same ranking as Abans’ existing unsecured notes, meaning they share the same claim on company assets in the event of a default. The proceeds from the issuance will be used to refinance existing debt.
Fitch’s rating is based on Abans’ strong position in the Sri Lankan consumer electronics market. The company boasts a wide distribution network and established brands, which contribute to its healthy financial profile. Fitch anticipates a gradual increase in demand for consumer durables as Sri Lanka’s economy recovers. This growth should help Abans manage any potential pressure on profitability caused by increased competition due to the recent resumption of imports.
The lifting of the import ban in October 2023 is expected to alleviate supply chain issues and reduce Abans’ inventory levels. Fitch reports that Abans’ inventory peaked at over 200 days during the financial year ending March 2023, a period coinciding with the height of the import ban. With Sri Lanka’s improved external financial standing and its commitment to free trade under the IMF program, Fitch believes a re-imposition of the import ban is unlikely in the foreseeable future.