RPT-Fitch rates National Savings Bank's senior notes 'BB-(EXP)'
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Aug 23 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned Sri Lanka-based National Savings Bank's (NSB; BB-/Stable) proposed issue of USD-denominated notes an expected rating of 'BB-(EXP)'.
The final rating is contingent upon receipt of final documents conforming to information already received.
Fitch believes that the issue of the notes by NSB is closely linked with government policy requirements. The proceeds will likely be used to invest in Sri Lanka's development bonds - USD-denominated debt issued by the government of Sri Lanka - and to fund USD- and LKR-denominated loans to state-owned entities and government-related projects.
KEY RATING DRIVERS
The notes are rated at the same level as NSB's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BB-' as they constitute unsecured and unsubordinated obligations of the bank.
NSB's ratings reflect Fitch's expectation of the government of Sri Lanka's high propensity but moderate ability to provide support, in case of need, to the bank. The state's high propensity to support NSB stems from the bank's full state ownership, systemic importance and its policy mandate of mobilising retail savings and investing them in government securities. The state's moderate ability to provide timely support to NSB in times of distress is reflected in the sovereign's 'BB-'rating, which is on Stable Outlook.
Fitch is of the view that state support, in case of need, is likely to be made equally available to depositors, who benefit from an explicit guarantee as contained in the NSB Act, and senior unsecured creditors. This is due to NSB's policy role and to maintain confidence and systemic stability. Fitch does not assign a Viability Rating to NSB as the latter is viewed as a public mission bank.
Any change in NSB's IDRs could impact the rating of the notes. Any change in Sri Lanka's rating or to the perception of state support to NSB could result in a change in NSB's IDRs and hence the rating of the notes.
A full list of NSB's ratings:
Long-Term Foreign- and Local-Currency IDRs: 'BB-'; Outlook Stable;
Proposed USD senior unsecured notes: assigned at 'BB-(EXP)';
Short-term Foreign Currency IDR: 'B';
Support Rating: '3';
Support Rating Floor: 'BB-'; and
National Long-Term Rating: 'AAA(lka)'; Outlook Stable.