Fitch Ratings has assigned a National Long-Term Rating of ‘BBB+(lka)’ to the proposed debt issuance of Siyapatha Finance PLC, amounting to 3.75 billion Sri Lankan Rupees. The rating agency applied its Bank Rating Criteria to the debentures, citing the similarities between the prudential capital frameworks of Sri Lankan finance companies and banks.

The debentures, set to mature in five years, will be listed on the Colombo Stock Exchange. The proceeds from this issuance are intended to bolster Siyapatha Finance’s Tier 2 capital base and support the expansion of its loan portfolio.

Fitch’s rating of the proposed debentures is two notches below Siyapatha’s National Long-Term Rating, reflecting the anticipated loss severity and potential for poor recoveries in the event of default. The rating does not include additional notching for non-performance risk, as the debentures do not feature going-concern loss absorption mechanisms.

Previously, on January 24, 2025, Siyapatha’s National Long-Term Rating was upgraded to ‘A(lka)’ from ‘BBB+(lka)’ following an upgrade of its parent company, Sampath Bank PLC, to ‘AA-(lka)’. Fitch’s assessment indicates that Sampath Bank would likely provide extraordinary support to Siyapatha, its wholly-owned financing subsidiary, if necessary. However, Siyapatha’s rating remains two notches below that of its parent due to its limited role within the core business of the group.

Rating Sensitivities

Factors that could lead to a downgrade of the subordinated debt rating include a downgrade of Siyapatha’s National Long-Term Rating. Conversely, an upgrade of Siyapatha’s National Long-Term Rating would lead to an upgrade of the subordinated debt rating.