Fitch rates Bank Ceylon’s proposed subordinated debt up to Rs.8bn ‘AA(lka)(EXP)’

Fitch Ratings has assigned Bank of Ceylon’s (BOC; AA+(lka)/Stable) proposed subordinated debentures of up to Rs.8 billion an expected national long-term rating of ‘AA(lka)(EXP)’.
The debentures, which are to 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 expand the loan book, improve its Tier II capital base and reduce asset and liability maturity mismatches.
The final rating is subject to the receipt of final documentation conforming to information already received.
The proposed subordinated debentures are rated one notch below BOC’s national long-term rating to reflect the subordination to senior unsecured obligations.
The national long-term rating of BOC reflects Fitch’s expectation of extraordinary support from the sovereign. 
Fitch expects support for BOC to stem from its high systemic importance, quasi-sovereign status, role as a key lender to the government and full state-ownership.