Fitch rates Sampath Bank notes A(lka)

Fitch Ratings said it assigned an expected national long-term rating of A(lka) to Sampath Bank plc's proposed Basel III compliant subordinated debentures.

The notes, which will total LKR7 billion and mature in five years, include a non-viability clause and will qualify as regulatory tier II capital for the bank, Fitch said.

The proceeds will be used to strengthen its tier II capital base and support its loan-book expansion, the agency said.

The agency said it the proposed tier II instrument one notch lower than the bank's national long-term rating of A+(lka) to reflect the notes' subordinated status and higher loss-severity risks relative to senior unsecured instruments.

The ratings reflect the bank's standalone financial strength, Fitch said.

Failure to maintain capital buffers commensurate with the bank's risk profile could pressure Sampath's rating, the agency said.

The ratings could be upgraded if the bank significantly strengthens its capitalization and restrains its growth trajectory, Fitch said.

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