ECONOMYNEXT – Sri Lanka Commercial Bank’s proposed Basel III-compliant subordinated debentures of up to 20 billion rupees has been assigned an expected National Long-Term Rating of ‘A(EXP)(lka)’ by Fitch Ratings.
“COMB’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,” the global ratings agency said.
The debentures include a non-viability clause whereby they will convert to ordinary voting shares subject to the occurrence of a trigger event, and will be listed on the Colombo Stock Exchange.
The full statement is reproduced below:
Fitch Rates Commercial Bank of Ceylon’s Basel III Subordinated Debt ‘A(EXP)(lka)’
Fitch Ratings – Colombo – 16 Apr 2026: Fitch Ratings has assigned Commercial Bank of Ceylon PLC’s (COMB, AA-(lka)/Stable) proposed Sri Lankan rupee-denominated Basel III-compliant subordinated debentures of up to LKR20 billion an expected National Long-Term Rating of ‘A(EXP)(lka)’.
The proposed debentures, which will have maturities of five, seven and 10 years, will be listed on the Colombo Stock Exchange. The bank plans to use the proceeds to further strengthen its Tier 2 capital base, reduce maturity mismatches of the balance sheet and support loan growth.
The bank expects the proposed debentures to qualify as Basel III-compliant regulatory Tier 2 capital. The debentures 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.
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 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 risks, as the proposed notes do not incorporate going-concern loss-absorption features.
COMB’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 COMB’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 on 21 January 2025, for the 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 expected 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 expected rating.