Tuesday 7 October 2014

Fitch rates Siyapatha Finance’s Subordinated Debt ‘A-(lka)(EXP)’

Fitch Ratings Lanka has assigned Siyapatha Finance Ltd’s (SLFL; A(lka)/Stable) proposed subordinated redeemable debentures of up to Rs. 1 b an expected National Long-Term Rating of ‘A-(lka)(EXP)’.

The proposed debentures will have a five-year tenor with bullet principal repayment at maturity. Coupon payments will made annually at a fixed rate. The debentures are to be listed on the Colombo Stock Exchange. SLFL expects to use the proceeds to strengthen its regulatory Tier 2 capital and to reduce maturity mismatches between assets and liabilities.

The final rating is contingent on receipt of final documentation conforming to information already received.

Key rating drivers
The proposed debentures are rated one notched below SLFL’s National Long-Term Rating to reflect their subordination to senior unsecured creditors.


SLFL’s rating reflects support from its parent, Sampath Bank PLC (AA-(lka)/Stable). SLFL is rated two notches below its parent because Fitch classifies SLFL as strategically important to Sampath Bank. This view is premised on Sampath Bank’s 100% ownership of SLFL, involvement in the strategic direction of SLFL through board representation, and the potential reputational repercussions on Sampath Bank should it allow SLFL to fail.

Rating sensitivities
Any changes to SLFL’s National Long-Term Rating would impact the issue’s National Long-Term Rating. SLFL’s rating could change if Sampath Bank’s rating changes or if SLFL’s strategic importance to Sampath Bank changes.
www.ft.lk

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