Fitch rates Bank of Ceylon’s subordinated debt final ‘AA’
Monday, 1 September 2014 00:00
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Fitch Ratings Lanka has assigned Bank of Ceylon’s (BOC; BB-/Stable) proposed subordinated debentures of up to Rs. 8 billion a final national long-term rating of ‘AA (lka)’.
The assignment of the final rating follows the receipt of final documents that conform to information previously received. The final rating is at the same level as the expected rating assigned on 3 July 2014.
The debentures, which have tenors of five and eight years and carry fixed and floating coupons, are to be listed on the Colombo Stock Exchange. BOC expects to use the proceeds to strengthen the bank’s regulatory Tier 2 capital base and reduce asset and liability maturity mismatches.
Key rating drivers – national ratings and debt ratings
The proposed debentures are rated one notch below BOC’s National Long-Term Rating to reflect their subordination to senior unsecured creditors and gone-concern loss-absorption quality in the event of liquidation, in line with Fitch’s criteria for rating such securities.
Rating sensitivities – national ratings and debt
Any change in Sri Lanka’s sovereign rating (BB-/Stable) or the perception of state support to BOC could result in a change in BOC’s National Long-Term rating and issue ratings.
A full list of BOC’s ratings follows:
Long-Term Foreign Currency IDR: ‘BB-’; Outlook Stable
Long-Term Local Currency IDR: ‘BB-’; Outlook Stable
Short-Term Foreign Currency IDR: ‘B’
Viability Rating: ‘b+’
Support Rating: ‘3’
Support Rating Floor: ‘BB-’
US dollar senior unsecured notes: ‘BB-’
National Long-Term Rating: ‘AA+ (lka)’; Outlook Stable
Sri Lanka rupee-denominated subordinated debentures: ‘AA (lka)’
