Fitch rates Senkadagala Finance’s proposed Rs. 1.75 b subordinated debt ‘BBB(EXP)’

Wednesday, 3 April 2019 00:00 - - {{hitsCtrl.values.hits}}

Fitch Ratings has assigned Senkadagala Finance PLC’s (Senka; BBB+(lka)/Stable) proposed subordinated unsecured debentures an expected National Long-Term Rating of ‘BBB(lka)(EXP)’.

The issuance is to total Rs. 1.75 billion, with the debentures to mature in five years and carry fixed coupons. The debentures are to be listed on the Colombo Stock Exchange. The debenture issue will improve Senka’s Tier 2 capital base and the proceeds will be used to fund loan-book growth.

The final ratings on the proposed debentures are subject to the receipt of final documentation conforming to information already received.

The proposed subordinated debentures are rated one notch below Senka’s National Long-Term Rating to reflect the subordination to senior unsecured obligations.

Senka’s National Long-Term Rating was affirmed on 17 July 2018 and reflects its strong franchise and well-matched maturity gaps, which are counterbalanced by a low proportion of deposit funding compared with higher-rated peers.

The rating of the proposed notes will move in tandem with Senka’s National Long-Term Rating.

An upgrade of Senka’s National Long-Term Rating is contingent upon the company sustaining stronger capital levels and a more robust deposit franchise. Senka’s rating could be downgraded if asset quality weakens, leading to a significant decline in capitalisation or excessive asset encumbrance.