Fitch Rates Bank of Ceylon's Subordinated Debt Final 'AA(lka)'

Tue Aug 19, 2014 4:44am EDT

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(The following statement was released by the rating agency) COLOMBO/TAIPEI, August 19 (Fitch) Fitch Ratings Lanka has assigned Bank of Ceylon's (BOC; BB-/Stable) proposed subordinated debentures of up to LKR8bn a final National Long-Term Rating of 'AA(lka)'. The assignment of the final rating follows the receipt of final documents that conform to information previously received. The final rating is at the same level as the expected rating assigned on 3 July 2014. The debentures, which 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 strengthen the bank's regulatory Tier 2 capital base and reduce asset and liability maturity mismatches. KEY RATING DRIVERS - NATIONAL RATINGS AND DEBT RATINGS The proposed debentures are rated one notch below BOC's National Long-Term Rating to reflect their subordination to senior unsecured creditors and gone-concern loss-absorption quality in the event of liquidation, in line with Fitch's criteria for rating such securities. RATING SENSITIVITIES - NATIONAL RATINGS AND DEBT Any change in Sri Lanka's sovereign rating (BB-/Stable) or the perception of state support to BOC could result in a change in BOC's National Long-Term rating and issue ratings. A full list of BOC's ratings follows: Long-Term Foreign Currency IDR: 'BB-'; Outlook Stable Long-Term Local Currency IDR: 'BB-'; Outlook Stable Short-Term Foreign Currency IDR: 'B' Viability Rating: 'b+' Support Rating:'3' Support Rating Floor: 'BB-' US dollar senior unsecured notes: 'BB-' National Long-Term Rating: 'AA+(lka)'; Outlook Stable Sri Lanka rupee-denominated subordinated debentures: 'AA(lka)' Contacts: Primary Analyst (National Ratings) Rukshana Thalgodapitiya Vice President +941 1254 1900 Fitch Ratings Lanka Ltd 15-04, East Tower, World Trade Center Colombo 1, Sri Lanka Secondary Analyst (National Ratings) Nayantara Bandaranayake Analyst +941 1254 1900 Committee Chairperson Jonathan Lee Senior Director +886 2 8175 7601 Media Relations: Bindu Menon, Mumbai, Tel: +91 22 4000 1727, Email: bindu.menon@fitchratings.com. Additional information is available on www.fitchratings.com. BOC has a 1.79% equity stake in Fitch Ratings Lanka Ltd. No shareholder other than Fitch, Inc. is involved in the day-to-day rating operations of, or credit reviews undertaken by, Fitch Ratings Lanka Ltd. Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(lka)' for National ratings in Sri Lanka. Specific letter grades are not therefore internationally comparable. Applicable criteria, "Global Financial Institutions Rating Criteria", dated 31 January 2014, "National Scale Ratings Criteria", dated 30 October 2013, "Assessing and Rating Bank Subordinated and Hybrid Securities" dated 31 January 2014, and "Evaluating Corporate Governance", dated 12 December 2012 are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Scale Ratings Criteria here Assessing and Rating Bank Subordinated and Hybrid Securities Criteria here Evaluating Corporate Governance here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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