Fitch lowers three Sri Lanka banks

Fitch Ratings said it downgraded the issuer default ratings of Bank of Ceylon and National Savings Bank to B+ from BB-, along with the issuer default ratings of People’s Leasing & Finance plc to B from B+.

Fitch also said it affirmed the issuer default rating of DFCC Bank plc at B+.

The outlooks on all of the issuer default ratings are negative, reflecting the negative outlook on Sri Lanka.

The downgrades follow a similar downgrade of the Sri Lankan sovereign to B+ from BB-, the agency said.

Fitch also said it assigned recovery ratings of RR4 to the dollar-denominated senior unsecured notes issued by Bank of Ceylon and National Savings Bank, reflecting average recovery prospects.

Fitch also said it affirmed the recovery rating on DFCC Bank’s dollar-denominated senior unsecured notes at RR4.

The agency said it maintains a stable sector outlook for the Sri Lankan banking sector for 2016 as it does not expect the sector’s credit profile to deteriorate materially even though operating conditions could become more challenging.

The operating environment remains a key rating driver for the sector given its potential volatility, Fitch said.

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