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Sri Lanka’s Seylan Bank to sell senior, bail-in bonds

ECONOMYNEXT – Fitch Ratings had given an expected rating a ‘A(lka) (EXP) to planned senior debt issue of Seylan Bank Plc and a two notches lower expected rating to proposed Basel III compliant bonds.

Basle III bonds can be converted to shares to make up for capital shortages.

Fitch Ratings said Seylan Bank expects to sell up to 10 billion rupees of bonds with tenors of 5 and 10 years.

Sri Lanka’s interest rates are now down amid negative private credit.

Fitch Rates Seylan Bank’s Senior Debt ‘A(lka)(EXP)’ and Basel III Sub Debt ‘BBB+(lka)(EXP)’

Fitch Ratings – Colombo – 21 Aug 2020: Fitch Ratings Lanka has assigned Seylan Bank PLC’s (A(lka)/Stable) proposed senior debentures an expected National Long-Term Rating of ‘A(lka)(EXP)’.

Fitch has also assigned Seylan’s proposed Basel III-compliant subordinated unsecured debentures an expected National Long-Term Rating of ‘BBB+(lka)(EXP)’.

The proposed debentures will total LKR10 billion, with maturities of five to ten years, and will be listed on the Colombo Stock Exchange.

The bank expects the proposed subordinated debentures to qualify as Basel III-compliant regulatory Tier 2 capital. T

he proposed debentures include a non-viability clause whereby they will convert to ordinary voting shares if so determined by the Monetary Board of Sri Lanka.

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The bank plans to use the proceeds from both proposed senior and subordinated debentures to support expansion of its loan book.

The final rating is subject to the receipt of final documentation conforming to information already received.

(Colombo/Aug22/2020 – Corrected two notches)