Fitch Ratings has assigned Sampath Bank PLC’s (A+(lka)/Negative) proposed Basel III compliant subordinated debentures an expected National Long-Term Rating of ‘A(lka)(EXP)’.
The notes will total Rs 7.5 billion, mature in five years and carry fixed coupons. A non-viability clause will be included and will qualify as regulatory Tier II capital. The proceeds will strengthen its Tier II capital base and support loan book expansion. The debentures are to be listed on the CSE. Fitch rates the proposed Tier II instrument one notch below the bank’s National Long-Term Rating of ‘A+(lka)’ to reflect the notes’ subordinated status and higher loss-severity risks relative to senior unsecured instruments. The notes would convert to equity upon the occurrence of a trigger event, as determined by the Monetary Board.