Fitch rates PABC debentures BB+(lka)

Fitch Ratings said it assigned a national long-term rating of BB+(lka) to Pan Asia Banking Corp. plc's (PABC) outstanding Sri Lanka rupee-denominated Basel II-compliant subordinated debentures.

The debentures mature in 2019 and amount to 3 billion in Sri Lankan rupee.

The outstanding subordinated debentures are rated one notch below the bank's national long-term rating, reflecting their subordination to senior unsecured creditors, Fitch explained.

The bank's national long-term rating of BBB-(lka) reflects declining capitalization following its rapid growth in the past, the agency said.

The bank is required to increase this further to 10 billion in Sri Lankan rupee by Jan. 1, 2018.

Fitch said it believes that the bank's earnings retention alone is not likely to be sufficient to achieve the capital standards, despite improved profitability.

The rating on the outstanding debentures will move in tandem with the bank's national long-term rating, the agency said.

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