Fitch Ratings has affirmed Sri Lanka-based retailer Abans PLC’s (Abans) National Long-Term Rating at ‘BBB+(lka)’ with a Stable outlook.
Fitch has also withdrawn the expected rating assigned to Abans’ proposed senior unsecured debentures as the debt issuance is no longer expected to convert to final ratings in the near future. A full list of rating actions is at the end of this commentary.
The affirmation of Abans’ ratings reflects our view that the recent weakening in its leverage is temporary, and that the company will be able to deleverage in the next 12-18 months, underpinned by a recovery in sales across a number of its product segments this year.
Abans’ ratings also reflect its strong market position in consumer durable retailing in Sri Lanka, its extensive brand portfolio and wide distribution network compared with most peers. We expect Abans’ net leverage (defined as lease adjusted debt net of cash/operating EBITDAR) to improve to 6.0x by the end of the financial year to March 2019 (FY19) from 7.7x in FYE17.
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