3 March 2016 10:22 am
Fitch Ratings yesterday downgraded the Issuer Default Ratings (IDR) of Bank of Ceylon (BOC) and National Savings Bank (NSB) to ‘B+’ from ‘BB-’ and downgraded the IDRs of People’s Leasing & Finance PLC’s (PLC) IDRs to ‘B’ from ‘B+’. The IDRs of DFCC Bank PLC (DFCC) were also affirmed at ‘B+’. The outlooks on all the IDRs are negative to reflect the negative outlook on the sovereign. Fitch took the rating actions after it downgraded the Sri Lankan sovereign to ‘B+’ from ‘BB-’ and assigned a negative outlook on Monday.
Fitch has also assigned Recovery Ratings of ‘RR4’ to the US dollar senior unsecured notes issued by BOC and NSB to reflect average recovery prospects. At the same time, Fitch affirmed the Recovery Rating on DFCC’s US dollar senior unsecured notes at ‘RR4’.
The National Ratings of BOC, NSB, DFCC and PLC have not been reviewed at this time. Fitch maintains a stable sector outlook for the Sri Lankan banking sector for 2016 as it does not expect the sector’s credit profile to deteriorate materially even though the operating conditions could become more challenging.
“The operating environment remains a key rating driver for the Sri Lankan banking sector given its potential volatility,” Fitch noted. Meanwhile, Fitch Ratings yesterday downgraded the Insurer Financial Strength (IFS) rating of Sri Lanka Insurance Corporation (SLIC) to ‘B+’ from ‘BB-’. The outlook is negative. “The National Ratings of SLIC have not been reviewed at this time,” Fitch said.