Sri Lanka Fitch rates Sampath Bank’s Subordinated Debt ‘A(lka)’
ECONOMYNEXT – Fitch Ratings said it has assigned Sampath Bank PLC’s (A+(lka)/Stable) Basel II-compliant subordinated debentures of up to Rs6 billion a final National Long-Term Rating of ‘A(lka)’.
The final rating is the same as the expected rating assigned on April 26, 2016, and follows the receipt of documents conforming to information already received, a statement said.
The debentures will mature in five years, and carry fixed and floating coupons. Sampath Bank plans to use the proceeds to strengthen its Tier 2 capital base. The debentures are to be listed on the Colombo Stock Exchange.
The issue is rated one notch below Sampath Bank’s National Long-Term Rating to reflect the subordination to senior unsecured creditors.
Fitch said Sampath Bank’s rating reflects its lower capitalisation relative to that of its peers and a relatively higher risk appetite, which offset benefits from growth of its franchise. The Outlook is Stable.
The rating on the proposed debentures will move in tandem with Sampath Bank’s National Long-Term Rating.
Fitch said it views the upside potential of Sampath Bank’s ratings as limited as long as the trend of higher risk taking and declining capitalisation persists. A sharp decline in its asset quality could result in a rating downgrade.
(COLOMBO, May 24 2016)