Fitch rates Bank of Ceylon subordinated debt final AA(lka)

Fitch Ratings Lanka has assigned Bank of Ceylon’s (BOC; AA+(lka)/Stable) proposed Basel II-compliant subordinated debentures of up to LKR8bn a final National Long-Term Rating of ‘AA(lka)’.

The final rating is the same as the expected rating assigned on 25 October 2016, and follows the receipt of documents conforming to information already received.

The proposed issuance, which will have tenors of five and eight years and carry fixed and floating coupons, are to be listed on the Colombo Stock Exchange. BOC expects to use the proceeds to expand the loan book, improve its Tier II capital base and reduce asset and liability maturity mismatches.

KEY RATING DRIVERS

The proposed subordinated debentures are rated one notch below BOC’s National Long-Term Rating to reflect the subordination to senior unsecured obligations.

The National Long-Term Rating of BOC reflects Fitch’s expectation of extraordinary support from the sovereign.

Fitch expects support for BOC to stem from its high systemic importance, quasi-sovereign status, role as a key lender to the government and full state ownership.

RATING SENSITIVITIES

The ratings on the proposed debentures will move in tandem with BOC’s National Long-Term Rating.

Any change in Sri Lanka’s sovereign rating or the perception of state support to BOC could result in a change in its National Long-Term Rating. Visible demonstration of preferential support for BOC in the form of an explicit guarantee may be instrumental to an upgrade of its National Long-Term Rating.

BOC’s ratings are follows:

Long-Term Foreign-Currency IDR: ‘B+’; Outlook Negative
Short-Term Foreign-Currency IDR: ‘B’
Long-Term Local-Currency IDR: ‘B+’; Outlook Negative
National Long-Term Rating: ‘AA+(lka)’; Outlook Stable
Viability Rating: ‘b+’
Support Rating: ‘4’
Support Rating Floor: ‘B+’
US dollar senior unsecured notes: ‘B+’; Recovery Rating at ‘RR4’
Basel II compliant outstanding subordinated debentures: ‘AA(lka)’
Proposed Basel II compliant subordinated debentures: ‘AA(lka)’

Sri Lanka's Treasuries yields steady at auction

ECONOMYNEXT - Sri Lanka's Treasuries yield were mainly steady at Wednesday's auction with the 06-month bill yield up one basis point to 9.56%, the debt office said.

The 03-month bill yield remained at 8.60% and that of the 12-motnh bill stayed at 10.10%, a statement said.

The debt office said it got bids worth Rs61 billion and accepted bids worth Rs18 billion.

Colombo Stock Exchange Market Review – 07th Dec 2016

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Colombo Stock Exchange Trade Summary 07-Dec-2016

Colombo Bourse extended losses for the second straight session amid profit taking after the quick 136 points surge seen in the past few days. ASI lost 23.10 index points (or 0.4%) to close at 6,327.30 while blue-chip S&P SL 20 index lost 6.21 index points (or 0.18%) to close at 3,533.84.

Sri Lanka Telecom (closed at LKR 36.00, -1.9%), Commercial Credit & Finance (closed at LKR 64.40, -4.0%) and Ceylon Cold Stores (closed at LKR 776.00, -1.1%) led the losers among the blue-chips whilst shares of Hatton National Bank (closed at LKR 225.50, +1.1%) and Central Finance (closed at LKR 100.00, +0.9%) gained ground. However, reflecting the overall bearish sentiments, the losers outweighed gainers 90 to 28 while 69 stocks remained unchanged.

Market turnover was LKR 830mn. Crossings in Nestle Lanka (0.05mn shares at LKR 2,050.00), Aitken Spence (1.4mn shares at LKR 65.00) and Lion Brewery (0.15mn shares at LKR 490.00) contributed 32% of the turnover. Accordingly, Aitken Spence (LKR 212mn), Nestle Lanka (LKR 111mn) and Lion Brewery (LKR 73mn) made highest contributions to the turnover along with Dialog Axiata (LKR 190mn).

Commercial Credit was the most actively traded share by far as the progress announcement of the share purchase agreement spurred interest among the retail investors. However, after the several days of bullish sentiments, the share witnessed some profit taking and closed at LKR 64.40 down by 4.0%. Further, relatively high level of activity were seen in John Keells Holdings (LKR 151.10,-0.3%), Aitken Spence (LKR 65.00) and Access Engineering (LKR 25.00).

Foreign investors continued to be active participants and accounted for 59% of the market activity. At the end of the session, foreign investors were net sellers with a net foreign outflow of LKR 106mn. Top net outflows were seen in Aitken Spence (LKR 189mn), Central Finance (LKR 9mn) and Nestle Lanka (LKR 8mn) while top net inflow was seen in Lion Brewery (LKR 73mn).

At the weekly T-Bill Auction, the rates remained steady in 3-month (8.6%) and 1-year durations (10.10%) while yield in 6-month T-bill edged higher by one bps to 9.56%. CBSL offered LKR 25bn worth of T-bills and the auction was oversubscribed by 2.4 times. However, CBSL accepted only LKR 18bn.
Source: LSL

Sri Lanka shares end near one-week closing low

Reuters: Sri Lankan shares ended weaker for a second straight session on Wednesday, to hit their lowest close in nearly one week, with foreign investors selling domestic shares as uncertainty over budget proposals continued to keep sentiment subdued.

The Colombo stock index ended down 0.36 percent at 6,327.30, moving away from its highest close since Nov. 15 hit on Monday. The bourse gained 1.17 percent last week, recording its first weekly gain in four weeks.

Foreign investors sold a net 105.6 million rupees ($711,590.30) worth of shares on Wednesday extending the year-to-date net foreign outflow to 1.9 billion rupees worth of shares.

Turnover was 830.1 million rupees, compared with this year's daily average of 699.03 million rupees.

Despite recent gains, investors are concerned that proposed increases in various taxes and fees would reduce disposable income and challenge consumption-led growth.

"Market is moving sideways as there is no clear direction and not much of retail (investor) participation," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

"The positive sentiment was short-lived and uncertainty over budget proposals and lack of positive sentiments very bad for investor climate."

The government aims to boost its 2017 tax revenue by 27 percent to 1.82 trillion rupees year-on-year to meet a commitment given to the International Monetary Fund in return for a $1.5 billion loan in May.

Brokers said investors were concerned about the sustainability of rates after the central bank on Tuesday kept key rates unchanged.

Shares of Colombo Cold Stores Plc fell 1.12 percent while the biggest-listed lender Commercial Bank of Ceylon Plc ended steady.

($1 = 148.4000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Sherry Jacob-Phillips)