Fitch says there is implied support from state-owned Bank of Ceylon, rated AA (lka), which owns 50 percent of the company.
At the end of the 2006 financial year CFS accounted for 19 percent of the BOC group's leasing portfolio.
"Fitch also takes comfort in CFS's close relationship enjoyed with its parent company, as evidenced by common directorships and committed funding lines from BOC," the rating agency said.
"CFS's rating is constrained by its small asset base, modest asset quality and solvency, its high credit concentrations, the low margins in its leasing portfolio, and the higher credit risk associated with equipment leasing.
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CFS's non-performing loans (NPLs) at the three-month level (as looked at by Fitch versus the six-month level by Central Bank of Sri Lanka's regulations for specialized leasing companies) measured by NPL/gross leases was at 10 percent at the end of the 2006 financial year up from 5 percent in 2005.
At end-December 2006 the average among similar firms