Fitch assigns CBC Finance’s proposed subordinated debt ‘BBB+(EXP)(lka)’ rating

Friday, 23 October 2026 04:34 - - {{hitsCtrl.values.hits}}

Fitch Ratings has assigned CBC Finance PLC’s (CBCF, A(lka)/Stable) proposed Sri Lankan rupee-denominated subordinated listed debentures of up to Rs. 1 billion an expected National Long-Term Rating of ‘BBB+(EXP)(lka)’.

The proposed debentures are likely to have a maturity of five years and are to be listed on the Colombo Stock Exchange. The company plans to use the proceeds to strengthen its Tier 2 capital base.

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

The proposed debentures are rated two notches below CBCF’s National Long-Term Rating. This reflects Fitch’s baseline notching for loss severity for this debt class and our expectation of poor recoveries in the event of default.

“We applied our Bank Rating Criteria to rate the proposed debentures, as we believe the prudential capital framework of Sri Lankan finance companies is closer to that of banks. There is no additional notching for non-performance risk, as the proposed debentures do not contain going-concern loss-absorption features,” the ratings agency said.

CBCF’s National Long-Term Rating is driven by Fitch’s expectation of extraordinary shareholder support from its parent, Commercial Bank of Ceylon PLC (COMB, AA-(lka)/Stable). This view is based on COMB’s full ownership of CBCF, a history of ordinary capital support and close brand alignment, despite limited overlap between CBCF’s target customer base and that of its parent bank.

Factors that could, individually or collectively, lead to negative rating action/downgrade include a downgrade of CBCF’s National Long-Term Rating would lead to a downgrade of the expected subordinated debt rating. A positive rating action/upgrade could be triggered by an upgrade of CBCF’s National Long-Term Rating would lead to an upgrade of the expected subordinated debt rating.