Fitch Ratings has assigned Sampath Bank PLC’s proposed Rs. 10 billion Basel III-compliant subordinated green bonds an expected National Long-Term Rating of ‘A(EXP)(lka)’, two notches below the bank’s own anchor rating, the agency said in a statement reproduced by EconomyNext on Tuesday.
The instruments are denominated in Sri Lankan rupees and will mature in five and seven years. They will be listed on the Colombo Stock Exchange. Sampath plans to use the proceeds to strengthen its Tier 2 regulatory capital base and to support balance sheet growth through the financing of green projects.
The proposed bonds carry a non-viability clause that converts them into ordinary voting shares on the occurrence of a trigger event determined by the Governing Board of the Central Bank of Sri Lanka. Fitch said the bank expects them to qualify as Basel III-compliant Tier 2 capital.
Fitch said the two-notch differential from Sampath’s National Long-Term Rating of ‘AA-(lka)/Stable’ reflects its baseline notching for loss severity on this type of debt and “expectations of poor recoveries”. No additional notching was applied for non-performance risk because the notes do not incorporate going-concern loss-absorption features.
“Sampath’s National Long-Term Rating is used as the anchor rating for this instrument because the rating reflects the bank’s standalone financial strength and best indicates the risk of the bank becoming non-viable,” Fitch said. The final rating is subject to the receipt of final documentation conforming to the information already provided.
The issue adds to a growing pipeline of green-finance instruments on the CSE. Renewable-energy developer WindForce recently secured an $18 million IFC loan tranche earmarked partly for battery storage projects, while a planned green bond issue of its own is in the works.
