Fitch rates BoC’s subordinated debentures ‘AA(lka)’ | Sunday Observer

Fitch rates BoC’s subordinated debentures ‘AA(lka)’

Fitch Ratings has assigned Bank of Ceylon’s (BOC) proposed Sri Lankan rupee-denominated Basel III-compliant, subordinated unsecured debentures a final National Long-Term Rating of ‘AA(lka)’.

The debentures, totalling up to Rs. 8 billion, are to have maturities of five and eight years, and carry fixed and floating-rate coupons. The bank plans to use the proceeds to support its loan book expansion and to strengthen its Tier II capital base. The debentures are to be listed on the Colombo Stock Exchange.

The debentures are to qualify as Basel III compliant regulatory Tier II capital for the bank and include a non-viability trigger upon the occurrence of a trigger event, as determined by the Monetary Board of Sri Lanka. The final terms indicate that the notes are subject to temporary or permanent write-down as determined by the Monetary Board of Sri Lanka and can be partially or fully written down upon the occurrence of a trigger event. There are no equity conversion provisions in the terms.

The final rating follows the receipt of documents conforming to information already received and is in line with the expected rating assigned on October 26, 2017.

BOC’s National Long-Term Rating, which reflects expectation of extraordinary support from the sovereign (Long-Term Issuer Default Rating: B+/Stable), is used as the anchor rating. Fitch rates the proposed Basel III Tier II notes one notch below the bank’s National Long-Term Rating of ‘AA+(lka)’. The notching includes only one notch for loss severity.

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