Fitch Rates SriLankan Airlines Govt Guaranteed Bonds Final 'BB-'
The final rating is the same as the expected rating assigned on 17 June 2014, and follows the receipt of documents conforming to information already received.
The bonds are rated at the same level as SLA's parent the government of Sri Lanka (GoSL) due to the unconditional and irrevocable guarantee provided by the government. GoSL directly holds 95% and indirectly holds 4% of SLA, through state owned entities. The proceeds of the issuance were for the acquisition of aircraft and working capital.
KEY RATING DRIVERS
Guarantee from GoSL: The rating of the bond is based on an unconditional and irrevocable guarantee of principal and interest of the notes provided by GoSL. As a result, the bond is rated at the same level as GoSL (BB-/Stable).
SLA is the national airline of Sri Lanka and has a 55% market share of total passenger volume to and from the island. Passenger numbers have increased to 4.2 million in 2014 from 2.6 million in 2010. The Sri Lankan tourism sector is undergoing growth and is being aided by the government's policy to transform the country into a strategic economic centre through the development of, amongst other things, tourism. As the leading airline in Sri Lanka, the company is well positioned to capture the benefits of this policy.
Negative: Future developments that may individually or collectively, lead to negative rating action include:
- A downgrade of GoSL ratings or change in Outlook to Negative.
Positive: Future developments that may individually or collectively, lead to positive rating action include:
- An upgrade of GoSL ratings or change in Outlook to Positive.