Fitch rates Bank of Ceylon notes AA(lka)

Fitch Ratings said it assigned an expected national long-term rating of AA(lka) to Bank of Ceylon’s proposed subordinated debentures of up to 8 billion in Sri Lankan rupee.

The debentures, which have five- and eight-year tenors, also carry fixed- and floating-coupons.

The bank also has a long-term foreign-currency issuer default rating of BB-, long-term local-currency issuer default rating of BB-, short-term foreign-currency issuer default rating of B, viability rating of B+, senior unsecured dollar-denominated notes rating of BB-, national long-term rating of AA+(lka) and an AA(lka) rating on its outstanding Sri Lankan rupee-denominated subordinated debentures.

The bank expects to use the proceeds of the new issue to strengthen its regulatory tier 2 capital base and reduce asset and liability maturity mismatches, Fitch said.

The ratings reflect the government of Sri Lanka’s high propensity, but moderate ability to provide support to the bank under extraordinary situations, the agency said.

The state’s high propensity stems from Bank of Ceylon’s high systemic importance as the largest bank in Sri Lanka, quasi-sovereign status, role as a key lender to the government and full government ownership, Fitch said.

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