ECONOMYNEXT – Fitch Ratings has given Sri Lanka’s National Development Bank’s proposed 16 billion rupee green bonds a final National Long-Term Rating of ‘BBB+(lka)’.”
The bonds include a non-viability clause whereby they will convert to ordinary voting shares subject to the occurrence of a trigger event.
“Fitch rates the proposed bonds two notches below NDB’s National Long-Term Rating anchor. This reflects Fitch’s baseline notching for loss severity for this type of debt and our expectations of poor recoveries,” the ratings agency said.
The statement is reproduced below:
Fitch Ratings – Colombo/Singapore – 17 Feb 2026: Fitch Ratings has assigned National Development Bank PLC’s (NDB, A(lka)/Stable) proposed Basel III-compliant subordinated, unsecured, green, social and sustainability/sustainability linked (GSS+) bonds of up to LKR16 billion a final National Long-Term Rating of ‘BBB+(lka)’.
The final rating is the same as the expected rating assigned on 19 December 2025 and follows the receipt of documents conforming to information already received.
Key Rating Drivers
The proposed bonds will mature in five and seven years and will be listed on the Colombo Stock Exchange. The bank plans to use the proceeds to strengthen its Tier 2 capital base and support loan book expansion through financing GSS+ projects.
The proposed bonds will qualify as Basel III-compliant regulatory Tier 2 capital. The bonds include a non-viability clause whereby they will convert to ordinary voting shares subject to the occurrence of a trigger event, as determined by the Governing Board of the Central Bank of Sri Lanka.
Fitch rates the proposed bonds two notches below NDB’s National Long-Term Rating anchor. 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 risk, as the proposed bonds do not incorporate going-concern loss-absorption features.
NDB’s National Long-Term Rating is used as the anchor rating for this instrument, because the rating reflects the bank’s standalone financial strength and best indicates the risk of the bank becoming non-viable. Fitch reviewed NDB’s ratings with no rating action on 8 September 2025. See our latest rating action commentary, Fitch Upgrades 10 Sri Lankan Banks’ National Ratings and Affirms Five after Scale Recalibration, published 21 January 2025, for key rating drivers and sensitivities.
Rating Sensitivities
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of the bank’s National Long-Term Rating would lead to a downgrade of the bond rating.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade of the bank’s National Long-Term Rating would lead to an upgrade of the bond rating
(Colombo/Feb18/2026)