Commercial Bank goes for Rs. 7 b debenture; Fitch rates ‘AA- (EXP)’

Monday, 28 December 2015 00:00 - - {{hitsCtrl.values.hits}}

Fitch Ratings Lanka has assigned Commercial Bank of Ceylon PLC’s (CB; AA(lka)/Stable) proposed Basel II-compliant subordinated debentures of up to Rs. 7bn, an expected National Long-Term Rating of ‘AA-(lka)(EXP)’.

The proposed issuance, which will have tenors of five and ten years and carry fixed coupons, will be listed on the Colombo Stock Exchange. CB expects to use the proceeds to strengthen its Tier 2 capital base and reduce asset-and-liability maturity mismatches.

The final rating is subject to the receipt of final documentation conforming to information already received.

KEY RATING DRIVERS

The proposed subordinated debentures are rated one notch below CB’s National Long-Term Rating, to reflect the subordination to senior unsecured creditors. The issuer rating is driven by CB’s measured risk appetite, solid franchise, sound track record, and strong funding profile.

RATING SENSITIVITIES

The rating on the proposed debentures will move in tandem with CB’s National Long-Term Ratings.

These ratings are primarily sensitive to CB’s ability to withstand cyclical asset quality deterioration.

A full list of CB’s ratings follows: National Long-Term Rating: ‘AA(lka)’; Stable Outlook

Outstanding Basel II-compliant Sri Lanka rupee-denominated subordinated debentures: ‘AA-(lka)’

Proposed Basel II-compliant Sri Lanka rupee-denominated subordinated debentures: ‘AA-(lka)( EXP)’