Sri Lanka’s National Development Bank subordinated debentures rated A+(lka): Fitch Ratings

Jun, 01, 2015 (LBO) – Sri Lanka’s Fitch Ratings Lanka has assigned National Development Bank proposed subordinated debentures of up to 10 billion rupees a final National Long-Term Rating of ‘A+(lka)’.

Full statement follows

Fitch Ratings Lanka has assigned National Development Bank PLC’s (NDB; AA-(lka)/Stable) proposed subordinated debentures of up to LKR10bn a final National Long-Term Rating of ‘A+(lka)’.

The final ratings are the same as the expected ratings assigned on 21 May 2015, following the receipt of documents conforming to information already received.

The proposed subordinated debentures, which will have a tenor of five years and carry fixed and zero coupons, will be listed on the Colombo Stock Exchange. NDB expects to use the proceeds to strengthen its Tier 2 capital base and reduce asset and liability maturity mismatches.

KEY RATING DRIVERS

The proposed subordinated debentures are rated one notch below NDB’s National Long-Term Rating to reflect the subordination to senior unsecured creditors.

The issuer rating is driven by the bank’s intrinsic financial strength. NDB’s rating captures its long and stable operating history and developing franchise as a commercial bank.

RATING SENSITIVITIES

The rating on the proposed debentures will move in tandem with NDB’s National Long-Term Ratings.
Fitch believes that NDB’s capitalisation and rating would come under pressure if the bank sustains its growth momentum, in the absence of other mitigating factors.

The consolidation of NDB’s franchise alongside its ability to sustain strong credit metrics could result in an upgrade of NDB’s ratings.

A full list of NDB’s ratings follows: Long-Term Foreign-Currency Issuer Default Rating (IDR): ‘B+’; Outlook Stable Short-Term Foreign-Currency IDR:

‘B’ Long-Term Local-Currency IDR: ‘B+’; Outlook Stable Viability Rating: ‘b+’ Support Rating : ‘4’ Support Rating Floor: ‘B’ National Long-Term Rating: ‘AA-(lka)’; Outlook Stable Outstanding subordinated debentures: ‘A+(lka)’ Proposed subordinated debentures: ‘A+(lka)’ For more details on NDB’s ratings and credit profile.