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Sri Lanka Sampath Bank’s debt gets final ‘A(lka)’ Fitch rating

ECONOMYNEXT – Fitch Ratings said it has assigned Sampath Bank PLC’s Basel II-compliant subordinated debentures of up to seven billion rupees a final National Long-Term Rating of ‘A(lka)’.

The final rating is the same as the expected rating assigned on 9 October 2015, and follows the receipt of documents conforming to information already received, a statement said.

The debentures, to be listed on the Colombo Stock Exchange, 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 and match the duration of the assets and liabilities in its long-term lending portfolio, Fitch said.

The issue is rated one notch below Sampath Bank’s National Long-Term Rating to reflect the subordination to senior unsecured creditors.

“Sampath Bank’s rating reflects its lower capitalisation relative to that of its peers and relatively higher risk appetite, which offset benefits from the growth of its franchise. The Outlook is Stable,” Fitch Ratings said.

The rating on the proposed debentures will move in tandem with Sampath Bank’s National Long-Term Ratings.

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/October 26 2015)
 

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