Fitch rates HNB’s Rs. 6 b debenture ‘A+(EXP)’

Fitch Ratings has assigned Hatton National Bank PLC’s (HNB; AA(lka)/Stable) proposed subordinated debenture issue of up to Rs. 6 b an expected National Long-Term Rating of ‘A+(lka)(EXP)’.

The debentures, which will have tenors of five and seven years and carry fixed coupons, will be listed on the Colombo Stock Exchange. HNB expects to use the proceeds to strengthen its Tier II capital base.

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 HNB’s National Long-Term Rating to reflect the subordination to senior unsecured debt. The National Long-Term Rating of HNB reflects its strong domestic franchise, satisfactory capitalisation and strong performance, which are counterbalanced by a higher risk appetite as seen in the sustained high loan growth that has put pressure on its funding and liquidity profile.

Rating sensitivities: The ratings on the proposed debentures will move in tandem with HNB’s National Long-Term Rating.

A full list of HNB’s ratings follows:

National Long-Term Rating at ‘AA(lka)’; Stable Outlook

Sri Lanka rupee denominated senior unsecured debentures at ‘AA(lka)’

Basel II compliant outstanding subordinated debentures at ‘A+(lka)’

Proposed Basel II compliant subordinated debentures at ‘A+(lka)(EXP)’