Fitch Assigns CBC Finance’s Proposed Subordinated Debt ‘BBB+(EXP)(lka)’ Rating

Fitch Ratings has assigned CBC Finance PLC’s (CBCF, A(lka)/Stable) proposed Sri Lankan rupee-denominated subordinated listed debentures of up to LKR1 billion an expected National Long-Term Rating of ‘BBB+(EXP)(lka)’.

The proposed debentures are likely to have a maturity of five years and are to be listed on the Colombo Stock Exchange. The company plans to use the proceeds to strengthen its Tier 2 capital base.

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

Key Rating Drivers

The proposed debentures are rated two notches below CBCF’s National Long-Term Rating. This reflects our baseline notching for loss severity for this debt class and our expectation of poor recoveries in the event of default.

We applied our Bank Rating Criteria to rate the proposed debentures, as we believe the prudential capital framework of Sri Lankan finance companies is closer to that of banks. There is no additional notching for non-performance risk, as the proposed debentures do not contain going-concern loss-absorption features.

CBCF’s National Long-Term Rating is driven by Fitch’s expectation of extraordinary shareholder support from its parent, Commercial Bank of Ceylon PLC (COMB, AA-(lka)/Stable). This view is based on COMB’s full ownership of CBCF, a history of ordinary capital support and close brand alignment, despite limited overlap between CBCF’s target customer base and that of its parent bank.

Please refer to our commentary, Fitch Upgrades 10 Sri Lankan NBFIs’ Ratings, Affirms 8 Following National Scale Recalibration, published 24 January 2025, for details on CBCF’s key rating drivers.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade of CBCF’s National Long-Term Rating would lead to a downgrade of the expected subordinated debt rating.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade of CBCF’s National Long-Term Rating would lead to an upgrade of the expected subordinated debt rating.

Date of Relevant Committee

28 October 2025

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

CBCF’s rating is linked to COMB’s National Long-Term Rating.