Bank of Ceylon’s proposed up to Rs. 8 billion debt. issue has been rated at ‘AA(lka)(EXP)’ by Fitch Ratings Lanka Limited.
According to the rating firm, the debentures are to be listed on the Colombo Stock Exchange.
BOC expects to use the proceeds to strengthen the bank’s regulatory Tier 2 capital base and reduce asset and liability maturity mismatches.
Fitch says, the proposed debentures are rated one notch below BOC’s National Long-Term Rating of ‘AA+(lka)’ to reflect their gone-concern loss-absorption quality in the event of a liquidation, in line with Fitch’s criteria for rating such securities.
The agency also notes that BOC’s Long-Term Rating is driven by the government of Sri Lanka’s high propensity but moderate ability to provide support to the bank under extraordinary circumstances.
In Fitch’s view, the state’s high propensity to support BOC stems from the bank’s systemic importance as the largest bank in the country, its quasi-sovereign status, its role as a key lender to the government and full government ownership.
The state’s moderate ability to provide timely support to BOC is reflected in the ‘BB-’/Stable rating.