Fitch rates National Development Bank notes A-(lka)

Fitch Ratings Lanka said it assigned National Development Bank plc’s proposed LKR 6.5 billion of Basel III-compliant five-year subordinated unsecured debentures an expected national long-term rating of A-(lka).

NDB’s proposed and outstanding Sri Lankan rupee-denominated subordinated debt is rated two notches below the national long-term rating anchor. This reflects Fitch’s baseline notching for loss severity for this type of debt and our expectations of poor recoveries. There is no additional notching for non-performance risks,” the agency said in a press release.

The debentures include a non-viability clause where they will convert to ordinary voting shares if so determined by the Monetary Board of Sri Lanka, Fitch said.

The bank plans to use the proceeds to strengthen its tier 2 capital base and support loan-book expansion.

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