Fitch rates DFCC Bank’s senior debentures ‘AA ( EXP)’

Tuesday, 10 November 2015 00:05 -     - {{hitsCtrl.values.hits}}

Fitch Ratings has assigned DFCC Bank PLC’s (DFCC; AA(lka)/Stable) proposed senior unsecured debentures of up to Rs. 10 b an expected National Long-Term Rating of ‘AA(lka)(EXP)’.

The proposed debentures, which will have tenors of four and six years and carry fixed and floating coupons, will be listed on the Colombo Stock Exchange. DFCC expects to use the proceeds to 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 senior debentures are rated in line with DFCC’s National Long-Term Rating. The issues rank equally with the claims of the bank’s other senior unsecured creditors.

DFCC’s rating is driven by its high capitalisation and its developing commercial banking franchise.

Rating sensitivities

The ratings on the proposed debentures will move in tandem with DFCC’s National Long Term Rating.

A rating upgrade for DFCC would be contingent on the bank achieving a significantly stronger commercial banking franchise while maintaining strong credit metrics. DFCC’s rating could be downgraded if there is a sustained and substantial increase in risk appetite that could materially weaken its strong capital position.

A full list of DFCC’s ratings follows:

Long Term Foreign Currency Issuer Default Rating (IDR): ‘B+’; Outlook Stable

Long Term Local Currency IDR: ‘B+’; Outlook Stable

Short Term Foreign Currency IDR: ‘B’

Viability Rating: ‘b+’

Support Rating: ‘4’

Support Rating Floor: ‘B’

US dollar senior, unsecured notes: ‘B+’; Recovery Rating ‘RR4’

National LongTerm Rating: ‘AA(lka)’ Stable Outlook

Sri Lanka rupee denominated senior unsecured debentures: ‘AA( lka)’

Proposed Sri Lanka rupee denominated senior unsecured debentures: ‘AA( lka)(EXP)’

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