Sri Lanka Siyapatha Finance’s proposed debt rated ‘BBB+(lka)’ by Fitch

Siyapatha Finance’s proposed debt of 3.75 billion Sri Lanka rupees has been rated ‘BBB+(lka)’ by Fitch Ratings.

“We applied our Bank Rating Criteria to rate the proposed debentures, as we believe the prudential capital framework of Sri Lankan finance companies is close to that for banks,” the ratings agency said.

The proposed debentures will mature in five years and will be listed on the Colombo Stock Exchange.

The full statement is reproduced below:

Fitch Rates Siyapatha Finance’s Proposed Subordinated Debt Final ‘BBB+(lka)’ Rating

Fitch Ratings – Singapore/Colombo: Fitch Ratings has assigned Siyapatha Finance PLC’s (A(lka)/Stable) proposed Sri Lankan rupee-denominated subordinated debentures of up to LKR3.75 billion a final National Long-Term Rating of ‘BBB+(lka)’.

The final rating is the same as the expected rating assigned on 18 November 2025 and follows the receipt of documents conforming to information already received.

Key Rating Drivers

The proposed debentures will mature in five years and will be listed on the Colombo Stock Exchange. The company plans to use the proceeds to strengthen its Tier 2 capital base and support loan-book expansion.

The proposed debentures are rated two notches below Siyapatha’s National Long-Term Rating. This reflects our baseline notching for loss severity for this debt class and our expectation of poor recoveries in the event of default.

We applied our Bank Rating Criteria to rate the proposed debentures, as we believe the prudential capital framework of Sri Lankan finance companies is close to that for banks. The instruments will follow the same structure as Siyapatha’s outstanding subordinated debt issued in 2021. There is no additional notching for non-performance risk, as the proposed debentures do not contain going-concern loss-absorption.

Siyapatha’s National Long-Term Rating was upgraded to ‘A(lka)’ from ‘BBB+(lka)’ on 24 January 2025 following the upgrade of parent Sampath Bank PLC’s (AA-(lka)/Stable) National Long-Term Rating to ‘AA-(lka)’ from ‘A(lka)’. Siyapatha’s rating reflects Fitch’s expectation that Sampath would provide extraordinary support to the fully-owned financing subsidiary, if needed. Siyapatha is rated two notches below its parent because of its limited role in the parent group’s core business. See Fitch Upgrades 10 Sri Lankan NBFIs’ Ratings, Affirms 8 Following National Scale Recalibration, published 24 January 2025, for details on Siyapatha’s key rating drivers and sensitivities.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

A downgrade of Siyapatha’s National Long-Term Rating would lead to a downgrade of the subordinated debt rating.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade of Siyapatha’s National Long-Term Rating would lead to an upgrade of the subordinated debt rating

source: Economy Next