Fitch Ratings has assigned Housing Development Finance Corporation Bank of Sri Lanka’s (HDFC Bank; BBB(lka)/Stable) proposed senior unsecured debentures of up to Rs.4 billion a final National Long-Term Rating of ‘BBB(lka)’.

The assignment of the final rating follows the receipt of documents conforming to information already received, and the final rating is the same as the expected ratings assigned on 24 August 2015.

The proposed issuance, which will have tenors of five and 10 years and carry fixed and floating coupons, will be listed on the Colombo Stock Exchange. HDFC Bank expects to use the proceeds to reduce asset and liability maturity mismatches.

The proposed senior debentures are rated in line with HDFC Bank’s National Long-Term Rating. The issues rank equally with the claims of the bank’s other senior unsecured creditors.

The issuer rating is driven by Fitch’s expectation that the bank would receive extraordinary support from the state, if needed, given that the state effectively holds 51 percent of the bank. 

It also reflects Fitch’s view of the bank’s quasi-policy role in supporting the state’s initiatives to develop more housing for low- and middle-income families. However, the potential for state support is lower than for larger state-owned banks in Sri Lanka due to HDFC Bank’s lower systemic importance.