Fitch Ratings Lanka has assigned
The proposed debentures will total up to
The final rating is subject to the receipt of final documentation conforming to information already received.
KEY RATING DRIVERS
NDB's proposed and outstanding Sri Lankan rupee-denominated subordinated debt is rated two notches below the National Long-Term Rating anchor. 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.
NDB's National Long-Term Rating reflects its modest franchise and more balanced business model but thinner capitalisation relative to similar rated peers, as the notes do not incorporate going-concern loss-absorption features.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to positive rating action/upgrade:
NDB's subordinated debt would be upgraded if the bank's National Long-Term Rating is upgraded.
The prospect of an upgrade appears unlikely in the near term because of the pressure on the operating environment. In the medium term, an upgrade of NDB's rating could stem from a much stronger franchise and financial profile, in particular higher capital buffers that can absorb risks related to the operating environment.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
NDB's subordinated debt would be downgraded if the bank's National Long-Term Rating is downgraded.
NDB's rating would be downgraded if there were deterioration in its financial profile relative to the universe of rated entities in
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