Himalayan Bank debentures given LA rating by ICRA

KATHMANDU, MAY 24 -

ICRA Nepal , the only credit rating agency in the country, has given the debentures of Himalayan Bank Limited (HBL) an LA rating. HBL is preparing to issue debentures worth Rs 750 million. The LA certification means the instrument has little risk in the long run, according to ICRA.

Since the Securities Board of Nepal (Sebon) made credit rating mandatory for companies to get approval for making initial public offerings (IPOs) and issuing bonds, debentures, right shares and preference shares exceeding Rs 30 million, many companies have been getting themselves rated by ICRA. Sebon issued the rule on Feb 22.

Credit rating is the process where a company’s status or credit instruments to be issued by it are assessed for their credit worthiness. The assessment includes evaluation of the company’s overall performance financial indicators, goodwill, past performance and the pattern of governance. The main objective of the certification is to assure possible investors while investing in the company’s stock.

Deepak Raj Kafle, chief executive officer of ICRA, said they had recently granted certification to HBL’s debentures. “We have sent the rating to the bank for their perusal,” he said.

Kafle said that HBL’s LA rating means that it is capable of meeting its financial obligations during the period. “An A rating indicates the safety and low credit risk of the bank’s instrument,” he said.

HBL’s chief executive officer Ashoke Rana said that they were issuing debentures to increase supplementary capital so that business could be expanded. “We are awaiting approval from Nepal Rastra Bank to issue debentures,” he added. He said that the bank had planned to issue debentures within the current fiscal year but it would depend on how fast the central bank approves it.

Meanwhile, ICRA said that seven other companies planning to make IPOs were in the process of getting their credit ratings. Among them are Small Farmers Development Bank, Rural Microfinance Development Centre (RMDC), Manaslu Development Bank and Ridi Hydropower Development Company.

Small Farmers Development Bank has applied to Sebon for approval of its IPO worth Rs 60 million. Similarly, RMDC, Manaslu Development Bank and Ridi Hydropower plan to make IPOs valued at Rs 280.8 million, Rs 36 million and Rs 147 million respectively.

“These companies are likely to get the go-ahead for their IPO soon after they receive their credit rating certificates,” said Sebon’s director Niraj Giri.

Source: The Kathmandu Post