Fitch rates National Development notes BBB

Fitch Ratings said it assigned National Development Bank plc's planned Sri Lankan rupee-denominated Basel III-compliant subordinated debentures of up to LKR 10 billion an expected BBB(lka) national long-term rating and placed it on rating watch negative. The debentures will mature in five years and will be listed on the Colombo Stock Exchange.

“Fitch rates the proposed Basel III tier 2 notes two notches below the bank's national long-term rating of A-(lka), which is on RWN. 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 as the notes do not incorporate going-concern loss-absorption features,” the agency said in a press release.

The bank plans to use the proceeds to strengthen its tier 2 capital base as well as to support the bank's loan growth.

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