Fitch Ratings Lanka has assigned Hatton National Bank PLC’s (HNB; AA-(lka)/Stable) proposed Basel II-compliant subordinated debentures of up to LKR6bn a final National Long-Term Rating of ‘A+(lka)’.
The assignment of the final rating follows the receipt of documents conforming to information already received. The final rating is the same as the expected rating assigned for the subordinated debt on 25 August 2016.
The proposed issuance, which will have tenors of five and seven years and carry fixed coupons, will be listed on the Colombo Stock Exchange. HNB expects to use the proceeds to strengthen its Tier II capital base.
KEY RATING DRIVERS
The proposed subordinated debentures are rated one notch below HNB’s National Long-Term Rating to reflect the subordination to senior unsecured debt.
HNB’s National Long-Term Rating reflects its strong domestic franchise, satisfactory capitalisation and strong performance, which are counterbalanced by a higher risk appetite as seen in the sustained high loan growth that has put pressure on its funding and liquidity profile.
The ratings on the debentures will move in tandem with HNB’s National Long-Term Rating.