Fitch rates Hatton National notes A(lka)

Fitch Ratings said it assigned Hatton National Bank plc’s proposed Sri Lanka rupee-denominated Basel III-compliant subordinated debentures an expected A(lka) national long-term rating. The notes will total LKR 7 billion, mature in 10 years and include a non-viability clause.

“Fitch rates the proposed Basel III tier 2 notes two notches below the bank’s national long-term rating of AA-(lka). The two notches account for loss severity, which reflects poor recovery expectations compared with senior unsecured instruments due to the notes’ subordinated status. The notes would convert to equity upon the occurrence of a trigger event, as determined by the Monetary Board of Sri Lanka,” the agency said in a press release.

The bank plans to use the proceeds to refinance the debentures maturing this year, further strengthening the bank’s tier 2 capital base and supporting its balance-sheet growth.

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