Fitch Rates Sampath Bank’s subordinated debentures ‘A+(lka)(EXP)’

Nov 11, 2014 (LBO)- Fitch Ratings Lanka has assigned Sampath Bank PLC’s proposed subordinated debentures of up to seven billion rupees an expected National Long-Term Rating of ‘A+(lka)(EXP)’, the rating agency said in a media statement. The debentures, which will have tenors of five years and carry fixed coupons, will be listed on the Colombo Stock Exchange.

Sampath expects to use the proceeds to strengthen its Tier 2 capital base and reduce asset and liability maturity mismatches.

The final rating is subject to the receipt of final documentation conforming to information already received.

The Media Statement Reproduced below

KEY RATING DRIVERS

The proposed debentures are rated one notch below Sampath’s National Long-Term Rating to reflect their subordination to senior unsecured debt.

Sampath Bank’s rating is driven by its modest and expanding franchise, and relatively higher risk appetite as seen in its aggressive loan growth and high gold-backed lending until end-2013, which has put pressure on its asset quality. Fitch believes asset quality indicators could be weaker than those reported should a broader definition of impairment be applied.

This could put pressure on its rating given the