Fitch assigns Bank of Ceylon 'BB-' IDRs

Fitch Ratings has assigned Sri Lanka's Bank of Ceylon (BOC) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'BB-' with stable outlooks. Fitch has also assigned BOC a 'b+' Viability Rating (V/R). Simultaneously, BOC's National Long-Term rating and its outstanding subordinated debentures have been affirmed at 'AA+(lka)' with a stable outlook and 'AA(lka)', respectively.

Fitch has also assigned BOC's proposed senior unsecured US $-denominated notes an expected rating of 'BB-(exp)', same as its Foreign Currency IDR. The size and tenor of the notes are yet to be determined.

The final rating is contingent upon receipt of final documents conforming to information already received.

A full list of rating actions is provided at the end of this commentary.

BOC's IDRs and National Long-Term ratings reflect Fitch's expectation of support from the government of Sri Lanka (GoSL, 'BB-'), if required, given its quasi sovereign status, high systemic importance and role as one of the main bankers to the government. BOC is the largest bank in Sri Lanka and fully owned by GoSL. Any change in Sri Lanka's sovereign ratings would likely be reflected in the ratings of BOC.

The V/R reflects BOC's domestic franchise being underpinned by its sovereign linkages and extensive branch network, as well as its weak capitalisation, improving profitability, increasing loan/deposit ratio and concentration in the state sector (GoSL and state entities).