Fitch rates Commercial Bank’s subordinated debentures AA-

Jan 13, 2016 (LBO) – Fitch Ratings Lanka has assigned Commercial Bank's proposed Basel II-compliant subordinated debentures of up to 7 billion rupees a final National Long-Term Rating of 'AA-(lka)'.



The final rating is the same as the expected rating assigned on 22 December 2015, and follows the receipt of documents conforming to information already received, Fitch Ratings said.





The proposed issuance, which will have tenors of five and 10 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.

KEY RATING DRIVERS The issue is rated one notch below CB's National Long-Term Rating, to reflect the subordination to senior unsecured creditors. CB's rating is driven by its 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 Rating. CB's rating is primarily sensitive to its 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)'