Fitch rates LB Finance notes A-(lka), BBB+(lka)

Fitch Ratings said it assigned an expected national long-term rating of A-(lka) to LB Finance plc's proposed senior unsecured debentures and a BBB+(lka) to its subordinated debentures.

The issuance is to total 3 billion in Sri Lankan rupee. The debentures mature in five years and carry fixed coupons, the agency noted.

The proceeds will be used to fund loan book growth, reduce asset and liability maturity mismatches and to improve the bank's tier II capital base, Fitch said.

The proposed senior debentures are rated at the same level as LB's national long-term rating as they constitute unsecured and unsubordinated obligations of the company, the agency said.

The proposed subordinated debentures are rated one notch below its national long-term rating to reflect the subordination to its senior unsecured obligations, Fitch said.

The ratings capture the bank's established franchise and satisfactory levels of capital, which are supported by sound profitability through its higher-yielding products, the agency said.

These are counterbalanced by its relatively higher risk appetite as seen from its exposure to gold-backed lending, Fitch said.

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