Fitch assigns NDB’s Subordinated Debt Final ‘A+’

Thursday, 28 November 2013 00:00 - - {{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 a final National Long-Term Rating of ‘A+(lka)’. The debentures will be issued in three tranches with maturity of five, 10 and 12 years while coupon payments will be at fixed rates. The assignment of the final rating follows the receipt of final documents, which conform to information previously received. The final rating is at the same as the expected rating assigned on 18 November 2013. Key rating drivers The proposed debentures are rated one notch below NDB’s National Long-Term Rating to reflect their below-average recovery prospect relative to senior unsecured debt in the event of liquidation, in line with Fitch’s criteria for rating such securities. Rating sensitivities The subordinated debt rating will move in tandem with NDB’s 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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