Fitch affirms Pan Asia Banking Corp’s sub debt at ‘BBB-(lka)’

Fitch Ratings Lanka has affirmed Pan Asia Banking Corporation PLC’s (PABC) proposed subordinated debentures of up to LKR2.0bn at ‘BBB-(lka)’. A full list of PABC’s ratings is provided at the end of this commentary.

The issue is rated one notch below PABC’s National Long-Term rating (‘BBB(lka)’/Outlook Stable) reflecting its debt-like features. The proposed debentures have a maturity of five years with a principal bullet repayment at maturity.

Terms of interest payment have been amended since the rating assignment, and coupon payments will be made semi-annually or annually or at maturity with fixed or floating rates.

The debt structure does not contain any deferral clauses.

Initially, debentures of Rs 750 million are to be listed on the Colombo Stock Exchange by way of an introduction, with the remainder to be listed upon issuance.

PABC’s ratings reflect continued improvements in its credit profile from 2010 relative to local peers, particularly asset quality and capitalization, supported by structural changes within the bank over 2009-2010.

The ratings also reflect the bank’s small but steadily growing franchise and market share, supported by its recent branch expansion.

The bank’s credit metrics have moved closer to that of higher-rated peers.