Fitch assigns NDB’s Rs. 10 b debentures ‘A+ (EXP)’

Thursday, 21 November 2013 00:07 - - {{hitsCtrl.values.hits}}

Fitch Ratings Lanka has assigned National Development Bank PLC’s (NDB; AA-(lka)/Stable) proposed subordinated debentures of up to Rs. 10 billion an expected National Long-Term Rating of ‘A+(lka)(EXP)’. The debentures are to be listed on the Colombo Stock Exchange. They will be issued in three tranches with maturity of five, ten and twelve years while coupon payments will be at fixed rates. NDB expects to use the proceeds to strengthen the bank’s regulatory Tier 2 capital base. The final rating of the subordinated debentures is contingent upon receipt of final documents conforming to information already received. The proposed debentures are rated one notch below NDB’s National Long-Term Rating to reflect their gone-concern loss-absorption quality in the event of liquidation, in line with Fitch’s criteria for rating such securities. The proposed debentures’ expected rating is the same as the rating on the bank’s outstanding subordinated debentures. The subordinated debt rating will move in tandem with the National Long-term rating. A solid track record in developing and maintaining a commercial banking franchise with commensurate credit metrics could result in an upgrade of NDB’s ratings while a sustained and substantial weakening in asset quality, in capitalisation and in provision coverage could result in a downgrade.

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