Sri Lanka HNB Finance’s five-year bonds rated ‘A-(lka)(EXP)’

ECONOMYNEXT – Fitch Ratings said it has given an expected national long-term rating of ‘A-(lka)(EXP)’ to HNB Finance Limited’s (HFL) proposed Sri Lanka rupee-denominated subordinated unsecured debentures.

HNB Finance plans t sell two billion rupees of debentures which are to mature in five years and carry fixed coupons.

“The company plans to use the proceeds to strengthen its Tier II capital base and support its loan-book expansion,” a statement sad.

The proposed debentures are to be listed on the Colombo Stock Exchange.

The proposed subordinated debentures are rated one notch below HFL’s National Long-Term Rating to reflect the subordination to senior unsecured obligations, the rating agency said.

HFL’s National Long-Term Rating was confirmed on 22 February 2019.

The rating reflects Fitch’s expectation that support would be forthcoming from Hatton National Bank PLC, which owns 51 percent of HFL and is involved in HFL’s strategic direction through board representation and the common HNB brand.

The two-notch rating differential between the two entities reflects HFL’s limited role in the group, Fitch Ratings said.

HFL is engaged mainly in microfinance, which is not a major product for HNB.

The rating of the proposed notes will move in tandem with HFL’s National Long-Term Rating.

HFL’s ratings are sensitive to changes in Fitch’s assessment of HNB’s ability and propensity to provide support.
(COLOMBO, 02 July, 2019)