Sri Lanka’s Sampath Bank has received a final National Long-Term Rating of ‘A(lka)’ for its proposed green bond issuance of 10 billion rupees from Fitch Ratings. This rating is two levels lower than the bank’s primary rating of AA-(lka).
Fitch Ratings indicated that this rating reflects their assessment of potential loss severity associated with such debt and anticipates limited recovery outcomes. The full announcement is detailed below:
Fitch has rated Sampath Bank PLC’s proposed subordinated green bonds, compliant with Basel III and denominated in Sri Lankan rupees, at a final National Long-Term Rating of ‘A(lka)’. The bonds, which could reach up to LKR 10 billion, are set to mature in five and seven years and will be listed on the Colombo Stock Exchange. The funds raised will be utilized to enhance the bank’s Tier 2 capital and to facilitate the financing or refinancing of environmentally sustainable projects.
The bank aims for these bonds to qualify as Tier 2 capital under Basel III regulations. Additionally, they include a non-viability clause that specifies conversion into ordinary voting shares if a triggering event occurs, as determined by the Central Bank of Sri Lanka’s Governing Board.
The final rating matches the anticipated rating assigned on April 28, 2026, and follows the submission of documents that align with prior information received.
Key Rating Drivers:
Fitch assigns the proposed Basel III Tier 2 bonds a rating that is two notches below Sampath Bank’s National Long-Term Rating of ‘AA-(lka)’. This adjustment is based on Fitch’s evaluation of loss severity for this category of debt, with no further adjustments made for non-performance risks, given that the proposed bonds do not feature loss-absorption mechanisms associated with going concern.
The National Long-Term Rating serves as the baseline for this financial instrument, as it best reflects the bank’s independent financial strength and the likelihood of non-viability.
Fitch reviewed the ratings for Sampath Bank with no changes as of September 8, 2025. For insights into key rating drivers and sensitivities, refer to Fitch’s report titled “Fitch Upgrades 10 Sri Lankan Banks’ National Ratings and Affirms Five after Scale Recalibration,” published on January 21, 2025.
Rating Sensitivities:
Factors that could potentially lead to a downgrade of the rating include a decrease in the bank’s National Long-Term Rating, which would subsequently affect the subordinated debt rating.
Conversely, an upgrade in the bank’s National Long-Term Rating could result in an upgrade of the subordinated debt rating as well.
(Colombo/Jul 10/2026)
