Fitch rates Sri Lanka Sampath Bank’s Rs10bn debenture issue A(lka)

Fitch Ratings has assigned a final National Long-Term Rating of A(lka) to Sampath Bank PLC’s planned rupee-denominated subordinated debt, with issuance of up to LKR10 billion. The securities are due in five or seven years and are intended for listing on the Colombo Stock Exchange.

Sampath says it will use the funds to reinforce its Tier 2 capital, maintain capital-adequacy compliance and expand lending. The debentures meet Basel III criteria for regulatory Tier 2 capital. Their non-viability provision allows conversion into ordinary voting shares if the Central Bank of Sri Lanka’s Governing Board determines that a trigger event has occurred.

Fitch said the final grade matches its expected rating, issued on 10 September 2026, after it received documents consistent with information previously supplied. The agency placed the debentures two notches below the bank’s AA-(lka) National Long-Term Rating, which has a Stable outlook, citing expected loss severity and poor recoveries. It made no further adjustment for non-performance risk because the securities lack features that absorb losses while the bank remains a going concern.

Fitch uses Sampath’s National Long-Term Rating as the debt’s benchmark because it reflects the bank’s standalone financial strength and indicates the risk of the bank becoming non-viable. Fitch affirmed the bank’s ratings on 17 August 2026. It said a downgrade of Sampath’s National Long-Term Rating would also lower the subordinated debt rating.