Fitch assigns Siyapatha’s Senior Unsecured Debt Final ‘A­(lka)’

Fitch Ratings: Fitch Ratings has assigned Siyapatha Finance PLC’s (Siyapatha; A­(lka)/Negative) senior unsecured redeemable debentures of up to Rs. 2.5 b a National Long-Term Rating of ‘A­(lka)’. A full list of existing ratings is at the end of this rating action commentary.

The final rating is the same as the expected rating assigned on 11 March and follows the receipt of documents conforming to information already received. 

The issue will have two tranches with bullet principal repayments in the third and fifth years and a fixed rate coupon paid annually. The debentures will be listed on the Colombo Stock Exchange. Siyapatha expects to use the proceeds to fund lending growth, lengthen maturities of its liabilities and reduce structural maturity mismatches.

Key rating drivers

The issue has been rated at the same level as Siyapatha’s National Long-Term Rating according to Fitch criteria and ranks equally with the claims of the company’s other senior unsecured creditors. 

Siyapatha’s rating reflects Fitch’s view that support would be forthcoming from its parent, Sampath Bank PLC (A+(lka)/Negative), which owns 100% of Siyapatha and is involved in the company’s strategic direction through board representation. Siyapatha is rated two notches below its parent because of its limited contribution to the group’s core businesses and different branding from its parent. 

Rating sensitivities

Any changes to Siyapatha’s National Long-Term Rating would affect the issues’ National Long-Term Rating.

The rating on Siyapatha is sensitive to changes in Fitch’s assessment of Sampath Bank’s ability and propensity to provide support. 

Full list of ratings:

Siyapatha Finance PLC 

National Long-Term Rating: ‘A­(lka)’; Negative Outlook Outstanding subordinated debentures: ‘BBB+(lka)’ 

Senior unsecured debenture: assigned at ‘A­(lka)’