Sri Lanka’s Sampath Bank to sell Rs7.0bn in 5-year debt
ECONOMYNEXT – Sri Lanka based Sampath Bank Plc’s planned 5-year debt has been given an expected ‘A(lka)(EXP)’, rating, Fitch, a rating agency said.
The bank plans to sell 7.0 billion rupees of fixed interest rate 5-year bonds, which will be used to boost Tier II capital. (Colombo/Oct09/2015)
The full statement is reproduced below:
Fitch Rates Sampath Bank’s Subordinated Debt ‘A(lka)(EXP)’
Fitch Ratings-Colombo-09 October 2015: Fitch Ratings has assigned Sampath Bank PLC’s (A+(lka)/Stable) proposed Basel II-compliant subordinated debentures an expected National Long-Term Rating of ‘A(lka)(EXP)’.
The issuance is to total LKR7bn, with the debentures to mature in five years and carry fixed and floating coupons. The debentures are to be listed on the Colombo Stock Exchange. 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.
The final rating is subject to the receipt of final documentation conforming to information already received.
KEY RATING DRIVERS
The proposed subordinated debentures are 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.
The rating on the proposed debentures will move in tandem with Sampath Bank’s National Long-Term Ratings.
Fitch 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.