ECONOMYNEXT – Fitch Ratings has given an expected rating of ‘A(EXP)(lka)’ for Sampath Bank’s proposed Sri Lankan rupee-denominated Basel III-compliant subordinated debentures.
This differs from the expected rating of ‘BBB+(EXP)(lka)’ assigned on 7 November 2024 due to the upgrade of the bank’s national rating, Fitch said.
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The proposed Basel III Tier 2 notes to raise 10 billion rupees have been rated two notches below the bank’s National Long-Term Rating.
The full statement is reproduced below:
Fitch Reiterates Expected Rating on Sampath’s Proposed Sub Debt at ‘A(EXP)(lka)’
Fitch Ratings-Sri Lanka-03 February 2025: Fitch Ratings reiterates the expected rating of ‘A(EXP)(lka)’ on Sampath Bank PLC’s (AA-(lka)/Stable) proposed Basel III-compliant subordinated debentures, as published on 21 January 2025.
The expected rating on the Sri Lankan rupee-denominated Basel III-compliant subordinated debentures of up to LKR10 billion differs from the expected rating of ‘BBB+(EXP)(lka)’ assigned on 7 November 2024 due to the upgrade of the bank’s national rating.
The final rating is subject to the receipt of final documentation conforming to information already received.
KEY RATING DRIVERS
Fitch rates the proposed Basel III Tier 2 notes two notches below the bank’s National Long-Term Rating.
This reflects Fitch’s baseline notching for loss severity for this type of debt and our expectations of poor recoveries.
There is no additional notching for non-performance risks as the notes do not incorporate going-concern loss-absorption features.
RATING SENSITIVITIES
The subordinated debt rating will move in tandem with the bank’s National Long-Term Rating. (Colombo/Feb5/2025)